STANDEX INTERNATIONAL CORP/DE/ 10-Q

sxi20211231_10q.htm     UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549     FORM 10-Q   ☒      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934   For the quarterly period ended December 31, 2021   ☐     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934   Commission File Number 001-07233   STANDEX INTERNATIONAL CORPORATION (Exact name of registrant as specified in its charter)   D elaware   31-0596149 (State of incorporation) (IRS Employer Identification No.)   23 K eewaydin d rive , S alem , N ew H ampshire 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 Act:   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 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 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 number of shares of Registrant's Common Stock outstanding on February 1, 2022 was 12,235,330 .   1       STANDEX INTERNATIONAL CORPORATION     INDEX         Page No. PART I.  FINANCIAL INFORMATION:         Item 1.             Condensed Consolidated Balance Sheets as of December 31, 2021 and June 30, 2021 (unaudited) 3         Condensed   Consolidated   Statements of Operations for the three and six months ended December 31, 2021 and 2020 (unaudited) 4         Condensed   Consolidated   Statements of Comprehensive Income (Loss) for the three and six months ended December 31, 2021 and 2020 (unaudited) 5         Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended December 31, 2021 and 2020 (unaudited) 6         Condensed Consolidated Statements of Cash Flows for the six months ended December 31, 2021 and 2020 (unaudited) 8         Notes to Unaudited Condensed Consolidated Financial Statements 9       Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 24       Item 3. Quantitative and Qualitative Disclosures about Market Risk 35       Item 4. Controls and Procedures 36       PART II.  OTHER INFORMATION:         Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 37       Item 6. Exhibits 38   2       PART I. FINANCIAL INFORMATION ITEM 1   STANDEX INTERNATIONAL CORPORATION Unaudited Condensed Consolidated Balance Sheets       December 31,     June 30,   (In thousands, except per share data)   2021     2021   ASSETS                 Current Assets:                 Cash and cash equivalents   $ 147,155     $ 136,367   Accounts receivable, less allowance for credit losses of $ 2,034 and $ 1,588 at December 31, 2021 and June 30, 2021, respectively     107,107       109,883   Inventories     102,223       91,862   Prepaid expenses and other current assets     28,869       23,504   Income taxes receivable     12,025       12,750   Total current assets     397,379       374,366                     Property, plant, and equipment, net     129,242       133,373   Intangible assets, net     92,852       98,929   Goodwill     273,760       278,054   Deferred tax asset     7,851       9,566   Operating lease right-of-use asset     37,819       37,276   Other non-current assets     31,667       30,659   Total non-current assets     573,191       587,857                     Total assets   $ 970,570     $ 962,223                     LIABILITIES AND STOCKHOLDERS' EQUITY                 Current Liabilities:                 Accounts payable   $ 75,254     $ 74,756   Accrued liabilities     53,941       61,717   Income taxes payable     8,815       7,236   Total current liabilities     138,010       143,709                     Long-term debt     199,660       199,490   Operating lease long-term liabilities     30,114       29,041   Accrued pension and other non-current liabilities     79,336       83,558   Total non-current liabilities     309,110       312,089                     Contingencies (Note 15)                                       Stockholders' equity:                 Common stock, par value $ 1.50 per share, 60,000,000 shares authorized, 27,984,278 shares issued, 12,036,180 and 12,044,405 shares outstanding at December 31, 2021 and June 30, 2021     41,976       41,976   Additional paid-in capital     84,560       80,788   Retained earnings     877,158       852,489   Accumulated other comprehensive loss     ( 120,010 )     ( 116,140 ) Treasury shares: 15,948,098 and 15,939,873 shares at December 31, 2021 and June 30, 2021     ( 360,234 )     ( 352,688 ) Total stockholders' equity     523,450       506,425                     Total liabilities and stockholders' equity   $ 970,570     $ 962,223     See notes to unaudited condensed consolidated financial statements     3     STANDEX INTERNATIONAL CORPORATION Unaudited Condensed Consolidated Statements of Operations       Three Months Ended     Six Months Ended       December 31,     December 31,   (In thousands, except per share data)   2021     2020     2021     2020   Net sales   $ 185,709     $ 156,283     $ 361,319     $ 307,569   Cost of sales     116,937       98,267       226,310       194,816   Gross profit     68,772       58,016       135,009       112,753   Selling, general, and administrative expenses     43,531       40,199       86,283       79,069   Restructuring costs     843       509       1,283       1,996   Acquisition related costs     925       570       1,142       596   Other operating (income) expense, net     1,700       -       1,700       -   Total operating expenses     46,999       41,278       90,408       81,661   Income from operations     21,773       16,738       44,601       31,092   Interest expense     1,526       1,601       3,246       3,086   Other non-operating (income) expense, net     288       ( 60 )     311       ( 231 ) Income from continuing operations before income taxes     19,959       15,197       41,044       28,237   Provision for income taxes     4,929       3,189       10,193       5,885   Income from continuing operations     15,030       12,008       30,851       22,352   Income (loss) from discontinued operations, net of tax     ( 46 )     ( 631 )     ( 49 )     ( 1,258 ) Net income   $ 14,984     $ 11,377     $ 30,802     $ 21,094                                     Basic earnings (loss) per share:                                 Continuing operations   $ 1.25     $ 0.98     $ 2.56     $ 1.83   Discontinued operations     -       ( 0.05 )     -       ( 0.10 ) Total   $ 1.25     $ 0.93     $ 2.56     $ 1.73   Diluted earnings (loss) per share:                                 Continuing operations   $ 1.24     $ 0.98     $ 2.54     $ 1.82   Discontinued operations     -       ( 0.05 )     -       ( 0.10 ) Total   $ 1.24     $ 0.93     $ 2.54     $ 1.72                                     Weighted average number of shares:                                 Basic     12,033       12,195       12,028       12,213   Diluted     12,138       12,270       12,144       12,277     See notes to unaudited condensed consolidated financial statements     4     STANDEX INTERNATIONAL CORPORATION  Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)       Three Months Ended     Six Months Ended       December 31,     December 31,   (In thousands)   2021     2020     2021     2020   Net income   $ 14,984     $ 11,377     $ 30,802     $ 21,094   Other comprehensive income (loss):                                 Defined benefit pension plans:                                 Actuarial gains (losses) and other changes in unrecognized costs, net of tax   $ 16     $ ( 204 )   $ 101     $ ( 373 ) Amortization of unrecognized costs, net of tax     1,105       1,269       2,217       2,535   Derivative instruments:                                 Change in unrealized gains (losses), net of tax     1,451       361       1,609       ( 97 ) Amortization of unrealized gains (losses) into interest expense, net of tax     593       394       1,528       844   Foreign currency translation gains (losses), net of tax     ( 6,909 )     11,082       ( 9,325 )     20,601   Other comprehensive income (loss), net of tax   $ ( 3,744 )   $ 12,902     $ ( 3,870 )   $ 23,510   Comprehensive income   $ 11,240     $ 24,279     $ 26,932     $ 44,604     See notes to unaudited condensed consolidated financial statements     5     STANDEX INTERNATIONAL CORPORATION AND SUBSIDIARIES  Unaudited Consolidated Statements of Stockholders' Equity                                Accumulated Other                           For the six month period ended         Additional           Comprehensive           Total   December 31, 2021   Common     Paid-in     Retained     Income     Treasury Stock     Stockholders’   (in thousands, except as specified)   Stock     Capital     Earnings     (Loss)     Shares     Amount     Equity   Balance, June 30, 2021   $ 41,976     $ 80,788     $ 852,489     $ ( 116,140 )     15,940     $ ( 352,688 )   $ 506,425   Stock issued under incentive compensation plans and employee purchase plans     -       ( 853 )     -       -       ( 89 )     2,000       1,147   Stock-based compensation     -       4,625       -       -       -       -       4,625   Treasury stock acquired     -       -       -       -       97       ( 9,546 )     ( 9,546 ) Comprehensive income:                                                         Net income     -       -       30,802       -       -       -       30,802   Foreign currency translation adjustment     -       -       -       ( 9,325 )     -       -       ( 9,325 ) Pension, net of tax of $ 0.8 million     -       -       -       2,318       -       -       2,318   Change in fair value of derivatives, net of tax of $ 0.7 million     -       -       -       3,137       -       -       3,137   Dividends declared ($ 0.50 per share)     -       -       ( 6,133 )     -       -       -       ( 6,133 ) Balance, December 31, 2021   $ 41,976     $ 84,560     $ 877,158     $ ( 120,010 )     15,948     $ ( 360,234 )   $ 523,450                                                             For the six month period ended December 31, 2020                                                         (in thousands, except as specified)                                                         Balance, June 30, 2020   $ 41,976     $ 72,752     $ 827,656     $ ( 147,659 )     15,748     $ ( 333,093 )   $ 461,632   Stock issued under incentive compensation plans and employee purchase plans     -       ( 492 )     -       -       ( 69 )     1,463       971   Stock-based compensation     -       4,288       -       -       -       -       4,288   Treasury stock acquired     -       -       -       -       124       ( 7,593 )     ( 7,593 ) Comprehensive income:                                                     -   Net income     -       -       21,094       -       -       -       21,094   Foreign currency translation adjustment     -       -       -       20,601       -       -       20,601   Pension, net of tax of $ 0.7 million     -       -       -       2,162       -       -       2,162   Change in fair value of derivatives, net of tax of $ 0.2 million     -       -       -       747       -       -       747   Dividends declared ($ 0.46 per share)     -       -       ( 5,712 )     -       -       -       ( 5,712 ) Balance, December 31, 2020   $ 41,976     $ 76,548     $ 843,038     $ ( 124,149 )     15,803     $ ( 339,223 )   $ 498,190     6     STANDEX INTERNATIONAL CORPORATION AND SUBSIDIARIES  Unaudited Consolidated Statements of Stockholders' Equity                                Accumulated Other                           For the three month period ended         Additional           Comprehensive           Total   December 31, 2021   Common     Paid-in     Retained     Income     Treasury Stock     Stockholders’   (in thousands, except as specified)   Stock     Capital     Earnings     (Loss)     Shares     Amount     Equity   Balance, September 30, 2021   $ 41,976     $ 82,065     $ 865,355     $ ( 116,266 )     15,957     $ ( 360,400 )   $ 512,730   Stock issued under incentive compensation plans and employee purchase plans     -       ( 41 )     -       -       ( 9 )     212       171   Stock-based compensation     -       2,536       -       -       -       -       2,536   Treasury stock acquired     -       -       -       -       -       ( 46 )     ( 46 ) Comprehensive income:                                                         Net income     -       -       14,984       -       -       -       14,984   Foreign currency translation adjustment     -       -       -       ( 6,909 )     -       -       ( 6,909 ) Pension, net of tax of $ 0.4 million     -       -       -       1,121       -       -       1,121   Change in fair value of derivatives, net of tax of $ 0.6 million     -       -       -       2,044       -       -       2,044   Dividends declared ($ 0.26 per share)     -       -       ( 3,181 )     -       -       -       ( 3,181 ) Balance, December 31, 2021   $ 41,976     $ 84,560     $ 877,158     $ ( 120,010 )     15,948     $ ( 360,234 )   $ 523,450                                                             For the three month period ended December 31, 2020                                                         (in thousands, except as specified)                                                         Balance, September 30, 2020   $ 41,976     $ 74,035     $ 834,645     $ ( 137,051 )     15,780     $ ( 337,037 )   $ 476,568   Stock issued under incentive compensation plans and employee purchase plans     -       ( 20 )     -       -       ( 14 )     297       277   Stock-based compensation     -       2,533       -       -       -       -       2,533   Treasury stock acquired     -       -       -       -       37       ( 2,483 )     ( 2,483 ) Comprehensive income:                                                         Net income     -       -       11,377       -       -       -       11,377   Foreign currency translation adjustment     -       -       -       11,082       -       -       11,082   Pension, net of tax of $ 0.3 million     -       -       -       1,064       -       -       1,064   Change in fair value of derivatives, net of tax of $ 0.1 million     -       -       -       756       -       -       756   Dividends declared ($ 0.24 per share)     -       -       ( 2,984 )     -       -       -       ( 2,984 ) Balance, December 31, 2020   $ 41,976     $ 76,548     $ 843,038     $ ( 124,149 )     15,803     $ ( 339,223 )   $ 498,190     7     STANDEX INTERNATIONAL CORPORATION  Unaudited Condensed Consolidated Statements of Cash Flows       Six Months Ended       December 31,   (In thousands)   2021     2020   Cash flows from operating activities                 Net income   $ 30,802     $ 21,094   Income (loss) from discontinued operations     ( 49 )     ( 1,258 ) Income from continuing operations     30,851       22,352   Adjustments to reconcile net income to net cash provided by (used in) operating activities:                 Depreciation and amortization     15,222       16,521   Stock-based compensation     4,625       4,288   Non-cash portion of restructuring charge     337       ( 492 ) Contributions to defined benefit plans     ( 104 )     ( 4,880 ) Changes in operating assets and liabilities, net     ( 14,232 )     ( 6,281 ) Net cash provided by operating activities - continuing operations     36,699       31,508   Net cash provided by (used in) operating activities - discontinued operations     ( 364 )     2,254   Net cash provided by operating activities     36,335       33,762   Cash flows from investing activities                 Expenditures for property, plant, and equipment     ( 9,721 )     ( 10,145 ) Expenditures for acquisitions, net of cash acquired     -       ( 27,398 ) Other investing activity     1,646       275   Net cash provided by (used in) investing activities     ( 8,075 )     ( 37,268 ) Cash flows from financing activities                 Proceeds from borrowings     -       17,000   Payments of debt     -       ( 17,000 ) Contingent consideration payment     ( 1,167 )     -   Activity under share-based payment plans     1,147       971   Purchases of treasury stock     ( 9,546 )     ( 7,593 ) Cash dividends paid     ( 6,019 )     ( 5,624 ) Net cash provided by (used in) financing activities     ( 15,585 )     ( 12,246 ) Effect of exchange rate changes on cash and cash equivalents     ( 1,887 )     6,053   Net change in cash and cash equivalents     10,788       ( 9,699 ) Cash and cash equivalents at beginning of year     136,367       118,809   Cash and cash equivalents at end of period   $ 147,155     $ 109,110                     Supplemental Disclosure of Cash Flow Information:                 Cash paid during the year for:                 Interest   $ 2,561     $ 2,527   Income taxes, net of refunds   $ 7,944     $ 8,363     See notes to unaudited condensed consolidated financial statements   8     S TANDEX INTERNATIONAL CORPORATION Notes to Unaudited   Condensed Consolidated Financial Statements     1 )     Management Statement   In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly the results of operations for the three and six months ended December 31, 2021 and 2020 , the cash flows for the six months ended December 31, 2021 and 2020  and the financial position of Standex International Corporation (“Standex”, the “Company”, “we”, “us”, or “our”), at December 31, 2021 . The interim results are not necessarily indicative of results for a full year. The following unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. The unaudited condensed consolidated financial statements and notes do not contain information which would substantially duplicate the disclosures contained in the audited annual consolidated financial statements and notes for the year ended June 30, 2021 . The condensed consolidated balance sheet at June 30, 2021  was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. The financial statements contained herein should be read in conjunction with the Annual Report on Form 10 -K and in particular the audited consolidated financial statements for the year ended June 30, 2021 . Unless otherwise noted, references to years are to the Company’s fiscal years. Currently our fiscal year end is June 30.  For further clarity, our fiscal year 2022  includes the twelve -month period from July 1,  2021  to June 30, 2022 .   The estimates and assumptions used in the preparation of the consolidated financial statements have considered the implications on the Company as a result of the COVID- 19 pandemic and its related economic impacts. As a result of the COVID- 19 pandemic,  there is heightened volatility and uncertainty around supply chain performance, labor availability, and customer demand. However, the magnitude of such impact on the Company’s business and its duration is uncertain. The Company is not aware of any specific event or circumstance that would require an update to its estimates or adjustments to the carrying value of its assets and liabilities as of  December 31, 2021 and the issuance date of the Quarterly Report on Form 10 -Q.   The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. The Company evaluated subsequent events through the date and time its unaudited condensed consolidated financial statements were issued.     Recently Issued Accounting Pronouncements   There were no recently issued accounting pronouncements which are expected to have a material impact on the consolidated financial statements.      2 )     Acquisitions   The Company's recent acquisitions are strategically significant to the future growth prospects of the Company. At the time of the acquisition and December 31, 2021, the Company evaluated the significance of each acquisition on a standalone basis and in aggregate, considering both qualitative and quantitative factors.   During the first quarter of fiscal year  2021,  the Company acquired Renco Electronics ("Renco"), 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 are reported within our Electronics segment.   The Company paid $ 27.4  million in cash for all of the issued and outstanding equity interests of Renco Electronics. The purchase price was allocated to the net tangible and identifiable intangible assets acquired and liabilities assumed based on a valuation of their fair values on the closing date. Goodwill recorded from this transaction is attributable to Renco’s significant engineering and technical expertise in end markets supported by strong engineer-to-engineer relationships. In addition, Renco’s end markets and customer base in areas such as consumer and industrial are highly complementary to the Company’s existing business.   9     Intangible assets of $ 10.4  million consist primarily of $ 3.6  million for indefinite lived tradenames, and $ 6.8  million of customer relationships to be amortized over  12  years. The goodwill of $ 14.0  million created by the transaction is deductible for income tax purposes. The accounting for business combinations requires estimates and judgments regarding expectations for future cash flows of the acquired business, and the allocations of those cash flows to identifiable tangible and intangible assets, in determining the assets acquired and liabilities assumed. The fair values assigned to tangible and intangible assets acquired and liabilities assumed, including contingent consideration, are based on management’s best estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques.    The components of the fair value of the Renco Electronics acquisition, including the final allocation of the purchase price are as follows (in thousands):       Final Allocation   Fair value of business combination:         Cash payments   $ 29,613   Less, cash acquired     (2,207 ) Fair value of contingent consideration     3,000   Total   $ 30,406         Final Allocation   Identifiable assets acquired and liabilities assumed:         Other acquired assets   $ 4,522   Inventories     5,446   Property, plant, & equipment     410   Identifiable intangible assets     10,400   Goodwill     13,991   Debt assumed     (712 ) Liabilities assumed     (3,651 ) Total   $ 30,406     Acquisition Related Costs   Acquisition related costs include costs related to acquired businesses and other pending acquisitions. These costs consist of (i) deferred compensation arrangements and (ii) acquisition related professional service fees and expenses, including financial advisory, legal, accounting, and other outside services incurred in connection with acquisition activities, and regulatory matters related to acquired entities. These costs do not include purchase accounting expenses, which we define as acquired backlog and the step-up of inventory to fair value, or the amortization of the acquired intangible assets.   Acquisition related costs for the three months ended December 31, 2021, and 2020 were $ 0.9 million and $ 0.6 million, respectively. Acquisition related costs for the six months ended December 31, 2021, and 2020 were $ 1.1 million and $ 0.6 million, respectively.      10       3 )     Revenue From Contracts With Customers   Most of the Company’s contracts have a single performance obligation which represents the product or service being sold to the customer. Some contracts include multiple performance obligations such as a product and the related installation and/or extended warranty. Additionally, most of the Company’s contracts offer assurance type warranties in connection with the sale of a product to customers. Assurance type warranties provide a customer with assurance that the product complies with agreed-upon specifications. Assurance type warranties do not represent a separate performance obligation.   In general, the Company recognizes revenue at the point in time control transfers to its customer based on predetermined shipping terms. Revenue is recognized over time under certain long-term contracts within the Engineering Technologies and Engraving groups for highly customized customer products that have no alternative use and in which the contract specifies the Company has a right to payment for its costs, plus a reasonable margin. For products manufactured over time, the transfer of control is measured pro rata, based upon current estimates of costs to complete such contracts. Losses on contracts are fully recognized in the period in which the losses become determinable. Revisions in profit estimates are reflected on a cumulative basis in the period in which the basis for such revision becomes known.   Disaggregation of Revenue from Contracts with Customers   The following table presents revenue disaggregated by product line and segment (in thousands):       Three Months Ended   Revenue by Product Line   December 31, 2021     December 31, 2020                     Electronics   $ 76,626     $ 60,156                     Engraving Services     34,321       34,976   Engraving Products     2,323       2,974   Total Engraving     36,644       37,950                     Scientific     24,636       17,893                     Engineering Technologies     18,095       17,507                     Hydraulics Cylinders and Systems     13,248       10,623   Merchandising & Display     8,422       6,041   Pumps     8,038       6,113   Total Specialty Solutions     29,708       22,777                     Total revenue by product line   $ 185,709     $ 156,283     11     The following table presents revenue disaggregated by product line and segment (in thousands):       Six Months Ended   Revenue by Product Line   December 31, 2021     December 31, 2020                     Electronics   $ 152,462     $ 115,427                     Engraving Services     67,238       69,296   Engraving Products     4,576       5,055   Total Engraving     71,814       74,351                     Scientific     46,165       34,556                     Engineering Technologies     35,668       35,140                     Hydraulics Cylinders and Systems     23,901       22,954   Merchandising & Display     15,110       13,239   Pumps     16,199       11,902   Total Specialty Solutions     55,210       48,095                     Total revenue by product line   $ 361,319     $ 307,569     The following table presents revenue from continuing operations disaggregated by geography based on company’s locations (in thousands):       Three Months Ended     Three Months Ended     Six Months Ended     Six Months Ended   Net sales   December 31, 2021     December 31, 2020     December 31, 2021     December 31, 2020   United States   $ 105,597     $ 91,392     $ 204,581     $ 183,506   Asia Pacific     42,145       30,610       79,401       57,474   EMEA (1)     34,877       30,364       70,878       59,182   Other Americas     3,090       3,917       6,459       7,407   Total   $ 185,709     $ 156,283     $ 361,319     $ 307,569     ( 1 ) EMEA consists primarily of Europe, Middle East and S. Africa.    The following table presents revenue from continuing operations disaggregated by timing of recognition (in thousands) for the three months ended:       Three Months Ended   Timing of Revenue Recognition   December 31, 2021     December 31, 2020   Products and services transferred at a point in time   $ 175,616     $ 147,167   Products transferred over time     10,093       9,116   Net sales   $ 185,709     $ 156,283         Six Months Ended   Timing of Revenue Recognition   December 31, 2021     December 31, 2020   Products and services transferred at a point in time   $ 340,039     $ 290,638   Products transferred over time     21,280       16,931   Net Sales   $ 361,319     $ 307,569     12     Contract Balances   Contract assets represent sales recognized in excess of billings related to work completed but not yet shipped for which revenue is recognized over time. Contract assets are recorded as prepaid expenses and other current assets. Contract liabilities are customer deposits for which revenue has not been recognized. Current contract liabilities are recorded as accrued liabilities.   The timing of revenue recognition, invoicing and cash collections results in billed receivables, contract assets and contract liabilities on the consolidated balance sheets. When consideration is received from a customer prior to transferring goods or services to the customer under the terms of a contract, a contract liability is recorded. Contract liabilities are recognized as revenue after control of the goods and services are transferred to the customer and all revenue recognition criteria have been met.   The following table provides information about contract assets and liability balances (in thousands):       Balance at Beginning of Period     Additions     Amount Recognized     Balance at End of Period   Six months ended December 31, 2021                                 Contract assets:                                 Prepaid expenses and other current assets   $ 15,013     $ 19,034     $ 14,678     $ 19,369   Contract liabilities:                                 Customer deposits     471       6,472       6,691       252         Balance at Beginning of Period     Additions     Amount Recognized     Balance at End of Period   Six months ended December 31, 2020                                 Contract assets:                                 Prepaid expenses and other current assets   $ 9,140     $ 13,774     $ 13,305     $ 9,609   Contract liabilities:                                 Customer deposits     2,298       4,382       6,315       365     We recognized the following revenue which was included in the contract liability beginning balances (in thousands):         December 31, 2021   Revenue recognized in the period from:   Three months ended     Six months ended   Amounts included in the contract liability balance at the beginning of the period   $ 252     $ 471         December 31, 2020   Revenue recognized in the period from:   Three months ended     Six months ended   Amounts included in the contract liability balance at the beginning of the period   $ 1,418     $ 2,298         4 )      Fair Value Measurements   The financial instruments shown below are presented at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models may be applied.   13     Assets and liabilities recorded at fair value in the consolidated balance sheet are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Hierarchical levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities and the methodologies used in valuation are as follows:   Level 1 – Quoted prices (unadjusted) in active markets for identical assets and liabilities. The Company’s deferred compensation plan assets consist of shares in various mutual funds (investments are participant-directed) which invest in a broad portfolio of debt and equity securities. These assets are valued based on publicly quoted market prices for the funds’ shares as of the balance sheet dates.   Level 2 – Inputs, other than quoted prices in an active market, that are observable either directly or indirectly through correlation with market data. For foreign exchange forward contracts and interest rate swaps, the Company values the instruments based on the market price of instruments with similar terms, which are based on spot and forward rates as of the balance sheet dates. The Company has considered the creditworthiness of counterparties in valuing all assets and liabilities.   Level 3 – Unobservable inputs based upon the Company’s best estimate of what market participants would use in pricing the asset or liability.   There were no transfers of assets or liabilities between any levels of the fair value measurement hierarchy at December 31, 2021 and June 30, 2021 . The Company’s policy is to recognize transfers between levels as of the date they occur.   Cash and cash equivalents, accounts receivable, accounts payable, and debt are carried at cost, which approximates fair value.   The fair values of financial instruments were as follows (in thousands):       December 31, 2021       Total     Level 1     Level 2     Level 3   Assets                                 Marketable securities - deferred compensation plan   $ 3,809     $ 3,809     $ -     $ -   Foreign exchange contracts     9       -       9       -   Interest rate swaps     1,006       -       1,006       -                                     Liabilities                                 Foreign exchange contracts   $ 40     $ -       40     $ -   Interest rate swaps     1,057       -       1,057       -   Contingent acquisition payments (a)     2,167       -       -       2,167         June 30, 2021       Total     Level 1     Level 2     Level 3   Assets                                 Marketable securities - deferred compensation plan   $ 2,988     $ 2,988     $ -     $ -   Foreign exchange contracts     255       -       255       -                                     Liabilities                                 Foreign exchange contracts   $ 1,222     $ -     $ 1,222     $ -   Interest rate swaps     3,096       -       3,096       -   Contingent acquisition payments (a)     3,333       -       -       3,333     (a) The fair value of contingent consideration arrangements is determined based on the Company's evaluation as to the probability and amount of any contingent consideration that has been earned to date.   The financial liabilities based upon Level 3 inputs include contingent consideration arrangements relating to the acquisitions of Renco Electronics and GS Engineering. The Company is contractually obligated to pay contingent consideration payments to the Sellers of these businesses based on the achievement of certain criteria.   14     The Company is contractually obligated to pay contingent consideration to the sellers of GS Engineering in the event that certain revenue and gross margin targets are achieved during the five years following acquisition. The targets set in the GS Engineering stock purchase agreement were not met for the first or second year, which concluded in the fourth quarter of fiscal years 2020 and 2021, respectively. As of December 31, 2021, the Company could be required to pay up to $ 12.8 million for contingent consideration arrangements if the revenue and gross margin targets are met in fiscal years 2022 through 2024.   The Company is also obligated to pay contingent consideration to the sellers of Renco Electronics in the event that certain earnings targets are achieved during the  three  years following acquisition. Contingent acquisition payments are scheduled to be paid in periods through fiscal year  2024. During the first quarter of fiscal year 2022, the Company paid $ 1.2 million to the sellers as Renco exceeded the earnings targets during the first year of the measurement period. As of December 31, 2021,  the Company could be required to pay up to an additional $ 2.2 million for contingent consideration arrangements if the earnings targets are met.    The Company has determined the fair value of the liabilities for the contingent consideration based on a probability-weighted discounted cash flow analysis. This fair value measurement is based on significant inputs  not  observable in the market and thus represents a Level  3  measurement within the fair value hierarchy. The fair value of the contingent consideration liability associated with future payments was based on several factors, the most significant of which are the financial performance of the acquired businesses and the risk-adjusted discount rate for the fair value measurement.   The Company will update its assumptions each reporting period based on new developments and record such amounts at fair value based on the revised assumptions until the agreements expire.   5 )     Inventories   Inventories from continuing operations are comprised of the following (in thousands):       December 31, 2021     June 30, 2021   Raw materials   $ 50,246     $ 47,000   Work in process     24,121       22,539   Finished goods     27,856       22,323   Total   $ 102,223     $ 91,862     Distribution costs associated with the sale of inventory, which are recorded as a component of selling, general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations were $ 4.9  million and $ 2.9  million for the three months ended  December 31, 2021  and  2020 , respectively. Distribution costs were $ 8.6 million and $ 5.4 million for the six months ended   December 31, 2021  and  2020 , respectively.     6 )      Goodwill   Changes to goodwill by segment during the period were as follows (in thousands):     June 30, 2021     Translation Adjustment     December 31, 2021   Electronics   $ 144,832     $ ( 3,620 )   $ 141,212   Engraving     77,378       ( 443 )     76,935   Scientific     15,454       -       15,454   Engineering Technologies     37,085       ( 231 )     36,854   Specialty Solutions     3,305       -       3,305   Total   $ 278,054     $ ( 4,294 )   $ 273,760         7 )     Warranty Reserves   The expected cost associated with warranty obligations on our products is recorded as a component of cost of sales when the revenue is recognized. The Company’s estimate of warranty cost is based on contract terms and historical warranty loss experience that is periodically adjusted for recent actual experience. Since warranty estimates are forecasts based on the best available information, claims costs may differ from amounts provided. Adjustments to initial obligations for warranties are made as changes in the obligations become reasonably estimable.   15     The changes in warranty reserves from continuing operations, which are recorded as a component of accrued liabilities  were as follows (in thousands):       December 31, 2021     June 30, 2021   Balance at beginning of year   $ 2,086     $ 1,781   Acquisitions and other charges     ( 62 )     68   Warranty expense     326       2,007   Warranty claims     ( 582 )     ( 1,770 ) Balance at end of period   $ 1,768     $ 2,086       8 )      Debt   Long-term debt is comprised of the following (in thousands):       December 31, 2021     June 30, 2021   Bank credit agreements   $ 200,000     $ 200,000   Total funded debt     200,000       200,000   Issuance cost     ( 340 )     ( 510 ) Total long-term debt   $ 199,660     $ 199,490     Bank Credit Agreements   During the second quarter of fiscal year 2019, the Company entered into a five -year Amended and Restated Credit Agreement (“Credit Facility”, or “facility”). The facility has a borrowing limit of $ 500 million, which can be increased by an amount of up to $ 250 million, in accordance with specified conditions contained in the agreement. The facility also includes a $ 10 million sublimit for swing line loans and a $ 35 million sublimit for letters of credit.   At December 31, 2021 , the Company had standby letters of credit outstanding, primarily for insurance purposes, of $ 6.1 million and had the ability to borrow $ 281.2  million under the facility. Funds borrowed under the facility  may  be used for the repayment of debt, working capital, capital expenditures, acquisitions (so long as certain conditions, including a specified funded debt to EBITDA leverage ratio is maintained), and other general corporate purposes.  The facility contains customary representations, warranties and restrictive covenants, as well as specific financial covenants which the Company was compliant with as of  December 31, 2021 .  At December 31, 2021 , the carrying value of the current borrowings approximate fair value.   9 ) Accrued Liabilities   Accrued liabilities consist of the following (in thousands):       December 31, 2021     June 30, 2021   Payroll and employee benefits   $ 23,321     $ 32,550   Workers' compensation     2,193       2,118   Warranty reserves     1,768       2,086   Fair value of derivatives     1,097       4,318   Operating lease current liability     7,456       7,933   Other     18,106       12,712   Total   $ 53,941     $ 61,717       10 )       Derivative Financial Instruments   The Company is exposed to market risks from changes in interest rates, commodity prices and changes in foreign currency rates. The Company selectively uses derivative financial instruments in order to manage certain of these risks. Information about the Company’s derivative financial instruments is as follows:   16     Interest Rate Swaps   From time to time as dictated by market opportunities, the Company enters into interest rate swap agreements designed to manage exposure to interest rates on the Company’s variable rate indebtedness. The Company recognizes all derivatives on its balance sheet at fair value. The Company has designated its interest rate swap agreements, including those that may be forward-dated, as cash flow hedges, and changes in the fair value of the swaps are recognized in other comprehensive income until the hedged items are recognized in earnings. Hedge ineffectiveness, if any, associated with the swaps will be reported by the Company in interest expense.   The Company’s effective swap agreements convert the base borrowing rate on $ 200 million of debt due under our revolving credit agreement from a variable rate equal to 1 month LIBOR to a weighted average fixed rate of 1.27 % at December 31, 2021 . The fair value of the swaps, recognized in accrued liabilities and in other comprehensive income, is as follows (in thousands, except percentages):   Effective Date   Notional Amount     Fixed Interest Rate   Maturity   December 31, 2021     June 30, 2021   May 24, 2017   25,000     1.88 %   April 24, 2022   $ ( 146 )   $ ( 374 ) August 6, 2018   25,000     2.83 %   August 6, 2023     ( 911 )     ( 1,401 ) March 23, 2020   100,000     0.91 %   March 23, 2025     641       ( 907 ) April 24, 2020   25,000     0.88 %   April 24, 2025     200       ( 192 ) May 24, 2020   25,000     0.91 %   March 24, 2025     165       ( 222 )               $ ( 51 )   $ ( 3,096 )   The Company reported no losses for the three and six months ended December 31, 2021 , as a result of hedge ineffectiveness. Future changes in these swap arrangements, including termination of the agreements, may result in a reclassification of any gain or loss reported in accumulated other comprehensive income (loss) into earnings as an adjustment to interest expense. Accumulated other comprehensive income (loss) related to these instruments is being amortized into interest expense concurrent with the hedged exposure.   Foreign Exchange Contracts   Forward foreign currency exchange contracts are used to limit the impact of currency fluctuations on certain anticipated foreign cash flows, such as collections from customers and loan payments between subsidiaries. The Company enters into such contracts for hedging purposes only. The Company has designated certain of these currency contracts as hedges, and changes in the fair value of these contracts are recognized in other comprehensive income until the hedged items are recognized in earnings. Hedge ineffectiveness, if any, associated with these contracts will be reported in net income. At December 31, 2021 and June 30, 2021 , the Company had outstanding forward contracts related to hedges of intercompany loans with net unrealized losses of less than $ 0.1 million and losses of $ 1.0  million, respectively, which approximate the unrealized gains and losses on the related loans. The contracts have maturity dates ranging from fiscal year  2022  to 2024, which correspond to the related intercompany loans.   The notional amounts of the Company’s forward contracts, by currency, are as follows (in thousands):   Currency   December 31, 2021     June 30, 2021   USD     -       987   EUR     5,750       5,750   SGD     6,800       21,836   CAD     20,600       20,600     The table below presents the fair value of derivative financial instruments as well as their classification on the balance sheet (in thousands):     Asset Derivatives     December 31, 2021   June 30, 2021   Derivative designated Balance         Balance         as hedging instruments Sheet         Sheet           Line Item   Fair Value   Line Item   Fair Value   Interest rate swaps Prepaid expenses and other current assets   $ 1,006       $ -   Foreign exchange contracts Prepaid expenses and other current assets     9   Prepaid expenses and other current assets     255         $ 1,015       $ 255     17       Liability Derivatives     December 31, 2021   June 30, 2021   Derivative designated Balance         Balance         as hedging instruments Sheet         Sheet           Line Item   Fair Value   Line Item   Fair Value   Interest rate swaps Accrued liabilities   $ 1,057   Accrued liabilities   $ 3,096   Foreign exchange contracts Accrued liabilities     40   Accrued liabilities     1,222         $ 1,097       $ 4,318     The table below presents the amount of gain (loss) recognized in comprehensive income on our derivative financial instruments (effective portion) designated as hedging instruments and their classification within comprehensive income for the periods ended (in thousands):       Three Months Ended     Six Months Ended       December 31,     December 31,       2021     2020     2021     2020   Interest rate swaps   $ 1,901     $ ( 24 )   $ 1,840     $ ( 481 ) Foreign exchange contracts     18       380       222       266       $ 1,919     $ 356     $ 2,062     $ ( 215 )   The table below presents the amount reclassified from accumulated other comprehensive income (loss) to net income for the periods ended (in thousands):   Details about Accumulated                                 Affected line item Other Comprehensive   Three Months Ended     Six Months Ended   in the Unaudited Income (Loss) Components   December 31,     December 31,   Condensed Statements     2021     2020     2021     2020   of Operations Interest rate swaps   $ 602     $ 572     $ 1,204     $ 1,128   Interest expense Foreign exchange contracts     137       ( 38 )     619       ( 7 ) Other non-operating (income) expense, net     $ 739     $ 534     $ 1,823     $ 1,121         11 )     Retirement Benefits   The Company has defined benefit pension plans covering certain current and former employees both inside and outside of the U.S. The Company’s pension plan for U.S. employees is frozen for substantially all participants and has been replaced with a defined contribution benefit plan.   Net periodic benefit cost for the Company’s U.S. and Foreign pension benefit plans for the periods ended consisted of the following components (in thousands):       U.S. Plans     Non-U.S. Plans       Three Months Ended     Three Months Ended       December 31,     December 31,       2021     2020     2021     2020   Service cost   $ 1     $ 1     $ 59     $ 55   Interest cost     1,830       1,860       195       178   Expected return on plan assets     ( 3,259 )     ( 3,253 )     ( 217 )     ( 155 ) Recognized net actuarial loss     1,383       1,483       86       186   Amortization of prior service cost     -       -       ( 1 )     ( 1 ) Net periodic benefit cost   $ ( 45 )   $ 91     $ 122     $ 263     18         U.S. Plans     Non-U.S. Plans       Six Months Ended     Six Months Ended       December 31,     December 31,       2021     2020     2021     2020   Service cost   $ 2     $ 2     $ 122     $ 110   Interest cost     3,660       3,720       385       354   Expected return on plan assets     ( 6,519 )     ( 6,506 )     ( 428 )     ( 307 ) Recognized net actuarial loss     2,767       2,967       170       369   Amortization of prior service cost     -       -       ( 2 )     ( 2 ) Net periodic benefit cost   $ ( 90 )   $ 183     $ 247     $ 524     The following table sets forth the amounts recognized for the Company's defined benefit pension plans (in thousands):   Amounts recognized in the consolidated balance sheets consist of:   December 31, 2021     June 30, 2021   Prepaid benefit cost   $ 5,584     $ 5,661   Current liabilities     ( 591 )     ( 517 ) Non-current liabilities     ( 44,048 )     ( 47,425 ) Net amount recognized   $ ( 39,055 )   $ ( 42,281 )   The contributions made to defined benefit plans are presented below along with remaining contributions to be made for fiscal year 2022 (in thousands):       Fiscal Year 2022     Fiscal Year 2021     Remaining       Three Months Ended     Six Months Ended     Three Months Ended     Six Months Ended     Contributions   Contributions to defined benefit plans   December 31, 2021     December 31, 2021     December 31, 2020     December 31, 2020     FY 2022   United States, funded plan   $ -     $ -     $ 4,776     $ 4,776     $ -   United States, unfunded plan     52       104       52       104       107   United Kingdom     -       -       -       -       -   Germany, unfunded plan     -       -       -       -       283   Ireland     -       -       -       -       66       $ 52     $ 104     $ 4,828     $ 4,880     $ 456       12 )     Income Taxes   The Company's effective tax rate from continuing operations for the second quarter of fiscal year 2022 and for the six months of the fiscal year ending June 30, 2022 was 24.7 % and 24.8 %, respectively compared with 21.0 % and 24.8 % for the prior year quarter and prior year period, respectively. The tax rate was impacted in the current period by the following items: (i) a discrete tax benefit related to equity compensation, (ii) the jurisdictional mix of earnings, (iii) foreign withholding taxes, and (iv) reduction of global intangible low-taxed income.     19       13 )      Earnings Per Share   The following table sets forth a reconciliation of the number of shares (in thousands) used in the computation of basic and diluted earnings per share:       Three Months Ended     Six Months Ended       December 31,     December 31,       2021     2020     2021     2020   Basic - Average shares outstanding     12,033       12,195       12,028       12,213   Dilutive effect of unvested, restricted stock awards     105       75       116       64   Diluted - Average shares outstanding     12,138       12,270       12,144       12,277       Earnings available to common stockholders are the same for computing both basic and diluted earnings per share. There were no outstanding instruments that had an anti-dilutive effect at December 31, 2021.  There were  10,658 outstanding instruments that had an anti-dilutive effect at  December 31, 2020 .   Performance stock units of 143,233  and  130,461  for the  six months ended December 31, 2021 and 2020 , respectively, are excluded from the diluted earnings per share calculation as the performance criteria have not been met.   14 )      Accumulated Other Comprehensive Income (L oss)   The components of the Company’s accumulated other comprehensive income (loss) are as follows (in thousands):       December 31, 2021     June 30, 2021   Foreign currency translation adjustment   $ ( 30,569 )   $ ( 21,244 ) Unrealized pension losses, net of tax     ( 90,054 )     ( 92,372 ) Unrealized gains (losses) on derivative instruments, net of tax     613       ( 2,524 ) Total   $ ( 120,010 )   $ ( 116,140 )       15 )     Contingencies   From time to time, the Company is subject to various claims and legal proceedings, including claims related to environmental remediation, either asserted or unasserted, that arise in the ordinary course of business. While the outcome of these proceedings and claims cannot be predicted with certainty, the Company’s management does  not  believe that the outcome of any of the currently existing legal matters will have a material impact on the Company’s consolidated financial position, results of operations or cash flow. The Company accrues for losses related to a claim or litigation when the Company’s management considers a potential loss probable and can reasonably estimate such potential loss.   Litigation   In the second quarter of fiscal year  2019, a lawsuit was filed against Standex Electronics, Inc. ("Electronics"), a wholly owned subsidiary of the Company, by Miniature Precision Components, Inc. ("MPC"), a customer, seeking damages in connection with allegedly faulty sensors designed and manufactured by Electronics.  The subject sensors were incorporated by MPC into a subassembly sold by MPC to its customer, an automotive manufacturer. MPC alleges that the sensors incorrectly activated a diagnostic code in vehicles for which MPC’s customer issued a service bulletin, resulting in significant warranty costs for MPC. In the litigation, which is pending in the U.S. District Court for the Eastern District of Wisconsin, MPC seeks indemnification from Electronics for its costs. Electronics has numerous defenses to MPC’s claims. Trial for this case is currently scheduled for July 2022. During the second quarter of fiscal year 2022, the Company engaged in unsuccessful mediation with MPC, during which the Company offered to settle the matter in order to avoid the inherent risk of litigation as well as the cost of diverting internal resources. As a result, the Company has recorded $ 1.7 million as accrued liabilities related to this litigation. Based upon developments to date, the Company believes that the range of any reasonably possible loss, in excess of amounts accrued, would be between $ 0 and $ 6.3 million. The estimated range of reasonably possible loss is based upon currently available information and is subject to significant judgement and a variety of assumptions and known and unknown uncertainties.   20       16 )      Industry Segment Information   The Company has five reportable segments organized around the types of products sold:     • Electronics – manufactures and sells electronic components for applications throughout the end user market spectrum;   • Engraving – provides mold texturizing, slush molding tools, project management and design services, roll engraving, hygiene product tooling, low observation vents for stealth aircraft, and process machinery for a number of industries;    • Scientific – sells specialty temperature-controlled equipment for the medical, scientific, pharmaceutical, biotech and industrial markets;    • Engineering Technologies – provides net and near net formed single-source customized solutions in the manufacture of engineered components for the aviation, aerospace, defense, energy, industrial, medical, marine, oil and gas, and manned and unmanned space markets;    • Specialty Solutions – an aggregation of three operating segments that manufacture and sell refrigerated, heated and dry merchandizing display cases, custom fluid pump solutions, and single and double acting telescopic and piston rod hydraulic cylinders.    Net sales and income (loss) from continuing operations by segment were as follows (in thousands):       Three Months Ended December 31,       Net Sales     Income from Operations       2021     2020     2021     2020   Industry segment:                                 Electronics   $ 76,626     $ 60,156     $ 17,157     $ 9,962   Engraving     36,644       37,950       5,204       6,501   Scientific     24,636       17,893       5,490       4,234   Engineering Technologies     18,095       17,507       2,314       1,363   Specialty Solutions     29,708       22,777       3,738       3,211   Corporate     -       -       ( 8,662 )     ( 7,454 ) Restructuring costs     -       -       ( 843 )     ( 509 ) Acquisition related costs     -       -       ( 925 )     ( 570 ) Other operating income (expense), net     -       -       ( 1,700 )     -   Sub-total   $ 185,709     $ 156,283     $ 21,773     $ 16,738   Interest expense                     1,526       1,601   Other non-operating (income) expense                     288       ( 60 ) Income from continuing operations before income taxes                   $ 19,959     $ 15,197         Six Months Ended December 31,       Net Sales     Income from Operations       2021     2020     2021     2020   Industry segment:                                 Electronics   $ 152,462     $ 115,427     $ 35,430     $ 18,497   Engraving     71,814       74,351       10,078       12,374   Scientific     46,165       34,556       9,998       8,310   Engineering Technologies     35,668       35,140       3,213       1,831   Specialty Solutions     55,210       48,095       6,553       7,117   Corporate     -       -       ( 16,546 )     ( 14,445 ) Restructuring costs     -       -       ( 1,283 )     ( 1,996 ) Acquisition related costs     -       -       ( 1,142 )     ( 596 ) Other operating income (expense), net     -       -       ( 1,700 )     -   Sub-total   $ 361,319     $ 307,569     $ 44,601     $ 31,092   Interest expense                     3,246       3,086   Other non-operating (income) expense                     311       ( 231 ) Income from continuing operations before income taxes                   $ 41,044     $ 28,237     21       Net sales include only transactions with unaffiliated customers and include no intersegment sales. Income (loss) from operations by segment excludes interest expense and other non-operating (income) expense.     17 )      Restructuring   The Company has undertaken a number of initiatives that have resulted in severance, restructuring, and related charges.   2022 Restructuring Initiatives   The Company continues to focus its efforts to reduce cost and improve productivity across its businesses, particularly through headcount reductions, facility closures, and consolidations. Restructuring expenses primarily related to headcount reductions and other cost saving initiatives. The Company expects the 2022 restructuring activities to be completed by 2023.     Prior Year Restructuring Initiatives     Restructuring expenses primarily related to headcount reductions and facility rationalization within our Specialty Solutions segment. The Company also incurred restructuring expenses related to  third   party assistance with analysis and implementation of these activities. The Company expects the prior year restructuring activities to be completed by 2022.   A summary of charges by initiative is as follows (in thousands):       Three Months Ended     Six Months Ended       December 31, 2021     December 31, 2021   Fiscal Year 2022   Involuntary Employee Severance and Benefit Costs     Other     Total     Involuntary Employee Severance and Benefit Costs     Other     Total   Current year initiatives   $ 296     $ 547     $ 843     $ 671     $ 612     $ 1,283                                                           Three Months Ended     Six Months Ended       December 31, 2020     December 31, 2020   Fiscal Year 2021   Involuntary Employee Severance and Benefit Costs     Other     Total     Involuntary Employee Severance and Benefit Costs     Other     Total   Current year initiatives   $ 222     $ 201     $ 423     $ 463     $ 362     $ 825   Prior year initiatives     82       4       86       894       277       1,171       $ 304     $ 205     $ 509     $ 1,357     $ 639     $ 1,996     Activity in the reserve related to the initiatives is as follows (in thousands):   Current Year Initiatives   Involuntary Employee Severance and Benefit Costs     Other     Total   Restructuring liabilities at June 30, 2021   $ -     $ -     $ -   Additions and adjustments     671       612       1,283   Payments     ( 578 )     ( 319 )     ( 897 ) Restructuring liabilities at December 31, 2021   $ 93     $ 293     $ 386     22     Prior Year Initiatives   Involuntary Employee Severance and Benefit Costs     Other     Total   Restructuring liabilities at June 30, 2021   $ 39     $ 10     $ 49   Additions and adjustments     -       -       -   Payments     ( 39 )     ( 10 )     ( 49 ) Restructuring liabilities at December 31, 2021   $ -     $ -     $ -     Prior Year Initiatives   Involuntary Employee Severance and Benefit Costs     Other     Total   Restructuring liabilities at June 30, 2020   $ 520     $ 18     $ 538   Additions and adjustments     1,356       640       1,996   Payments     (1,830 )     (658 )     (2,488 ) Restructuring liabilities at December 31, 2020   $ 46     $ -     $ 46     The Company’s total restructuring expenses by segment are as follows (in thousands):       Three Months Ended     Six Months Ended       December 31, 2021     December 31, 2021       Involuntary Employee Severance and Benefit Costs     Other     Total     Involuntary Employee Severance and Benefit Costs     Other     Total   Electronics   $ 72     $ 18     $ 90     $ 72     $ 18     $ 90   Engraving     169       465       634       453       530       983   Engineering Technologies     50       -       50       141       -       141   Specialty Solutions     -       64       64       -       64       64   Corporate     5       -       5       5       -       5       $ 296     $ 547     $ 843     $ 671     $ 612     $ 1,283         Three Months Ended     Six Months Ended       December 31, 2020     December 31, 2020       Involuntary Employee Severance and Benefit Costs     Other     Total     Involuntary Employee Severance and Benefit Costs     Other     Total   Electronics   $ 82     $ -     $ 82     $ 251     $ 5     $ 256   Engraving     190       201       391       280       348       628   Engineering Technologies     2       -       2       37       -       37   Specialty Solutions     -       4       4       673       286       959   Corporate     30       -       30       116       -       116       $ 304     $ 205     $ 509     $ 1,357     $ 639     $ 1,996     Restructuring expense is expected to be approximately $ 1.1  million for the remainder of fiscal year 2022.   23       Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations   Statements contained in this Quarterly Report 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: the impact of pandemics such as the current coronavirus on employees, our supply chain, and the demand for our products and services around the world; 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 automotive, construction, aerospace, defense, transportation, food service equipment, consumer appliance, energy, oil and gas 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, certain materials used in electronics parts, petroleum based products, and refrigeration components; the impact of higher transportation and logistics costs, especially with respect to transportation of goods from Asia; the impact of inflation on the costs of providing our products and services; 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 potential for losses associated with the exit from or divestiture of businesses that are no longer strategic or no longer meet our growth and return expectations; 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 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; our ability to increase manufacturing production to meet demand including as a result of labor shortages; 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.   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. We have seven operating segments aggregated into five reportable segments: Electronics, Engraving, Scientific, Engineering Technologies, and Specialty Solutions. Three operating segments are aggregated into Specialty Solutions. 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 focused industrial platforms through our Standex 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.    24     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 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 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 recruitment, training, development, and succession planning for employees throughout our worldwide organization.  Through the use of our Standex Value Creation System, we have developed a balanced approach to value creation.  We intend to continue investing acquisition capital in high margin and growth businesses, and we will continue to support all of our businesses as they enhance value through deployment of the Standex Valuation Creation System.   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, the introduction of products and technologies into new markets, key accounts and strategic sales channel partners, and the introduction of new technologies into existing markets. 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:     ● In the third quarter of fiscal year 2021, we divested Enginetics Corporation (“Enginetics”) our jet engine components business reported within our Engineering Technologies segment, to Enjet Aero, LLC, a privately-held aerospace engine component manufacturing company. This divestiture allows us to focus on the higher growth and margin opportunities of our core spin forming solutions business that serves the space, commercial aviation and defense end markets. We received $11.7 million cash consideration and recorded a loss on the sale of $14.6 million in the Consolidated Financial Statements.      ● In the first quarter of fiscal year 2021, we acquired Renco Electronics (“Renco”), 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.  Renco operates one manufacturing facility in Florida and is supported by contract manufacturers in Asia.  Renco’s results are reported within our Electronics segment.   As a result of our portfolio moves over the past several years, we have transformed Standex to a company with 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 continue benefitting from the economic rebound associated with the emergence from the end of the COVID-19 crisis and to use our cash flow from operations to 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.    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 investments in capital assets to upgrade our facilities, improve productivity and lower costs, invest in the strategic growth programs described above, including organic growth and acquisitions, and to return cash to our shareholders through payment of dividends and stock buybacks.    25     Restructuring expenses reflect costs associated with our 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 its 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, we calculate 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 such 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 worldwide, we continue to be impacted globally by COVID-19 related issues. We have taken effective action around the world 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 maintain operations. Initially, we experienced revenue reductions in many of our businesses due to the impact that the pandemic had on our customers. Conversely, public and private sector responses to COVID-19 vaccine distribution, especially in the United States, have also resulted in increased sales of scientific refrigeration equipment to customers within our Scientific reporting segment. More recently we have been impacted by (i) supply chain shortages and increased costs associated with the well-documented global logistics issues and (ii) labor shortages, especially in North America.   We exited the second quarter of fiscal year 2022 with $147.2 million in cash and $199.7 million of borrowings under our revolving credit facility.  Our leverage ratio covenant, as defined in our revolving credit agreement, was 1.20 to 1 and allowed us the capacity to borrow an additional $281.2 million at December 31, 2021. We believe that we have sufficient liquidity around the world and access to financing to execute on our short and long-term strategic plans.    Finally, we continue to monitor our ability to participate in any governmental assistance programs available to us in each of our global locations and participate in these programs as available and appropriate.    26     Results from Continuing Operations       Three Months Ended     Six Months Ended       December 31,     December 31,   (In thousands, except percentages)   2021     2020     2021     2020   Net sales   $ 185,709     $ 156,283     $ 361,319     $ 307,569   Gross profit margin     37.0 %     37.1 %     37.4 %     36.7 % Income from operations     21,773       16,738       44,601       31,092         Three Months Ended     Six Months Ended   (In thousands)   December 31, 2021     December 31, 2021   Net sales, prior year period   $ 156,283     $ 307,569   Components of change in sales:                 Organic sales change     32,016       57,623   Effect of business divestitures     (2,302 )     (5,338 ) Effect of exchange rates     (288 )     1,465   Net sales, current period   $ 185,709     $ 361,319     Net sales increased in the second quarter of fiscal year 2022 by $29.4 million or 18.8% when compared to the prior year quarter. Organic sales increased $32.0 million or 20.5%, primarily due to pricing actions and strong demand in our Electronics and Scientific segments, while foreign currency had a $0.3 million or 0.2% negative impact on sales. Sales in the prior year quarter included revenue of $2.3 million related to our divested Enginetics business.   Net sales increased in the six months ended December 31, 2021 by $53.8 million or 17.5% when compared to the prior year period. Organic sales increased $57.6 million or 18.7%, primarily due to pricing actions and strong demand in our Electronics and Scientific segments, while foreign currency had a $1.5 million or 0.5% positive impact on sales. Sales in the prior year period included revenue of $5.4 million related to our divested Enginetics business.    Gross Profit Margin   Our gross margin for the second quarter of fiscal year 2022 was 37.0%, which slightly declined from the prior year quarter’s gross margin of 37.1%. This decline is primarily the result of project mix, and raw material and ocean freight cost headwinds, offset by organic sales increases and price and productivity initiatives across our segments.   Our gross margin for six months ended December 31, 2021 was 37.4%, which increased from the prior year quarter’s gross margin of 36.7%. This increase is a result of organic sales increases and price and productivity initiatives, partially offset by raw material and ocean freight cost headwinds, a one-time project related charge at Engineering Technologies in the first quarter, along with production decreases due to a temporary work stoppage in our Specialty Solutions segment which was resolved during the first quarter.   Selling, General, and Administrative Expenses   Selling, General, and Administrative (“SG&A”) expenses for the second quarter of fiscal year 2022 were $43.5 million, or 23.4% of sales, compared to $40.2 million, or 25.7% of sales, during the prior year quarter.  SG&A expenses during the quarter were impacted by increased distribution expense of approximately $2.1 million associated with higher organic sales volume in the quarter, as well as increases in research and development costs and compensation related accruals.   SG&A expenses for the six months ended December 31, 2021 were $86.3 million, or 23.9% of sales, compared to $79.1 million, or 25.7% of sales, during the six months ended December 31, 2020.  SG&A expenses during the period were impacted by increased distribution expense of approximately $3.3 million associated with higher organic sales volume in the six months ended December 31, 2021, increases in research and development costs and compensation related accruals.   Restructuring Charges   We incurred restructuring expenses of $0.8 million in the second quarter of fiscal year 2022 and $1.3 million for the six months ended December 31, 2021, primarily related to productivity improvements and global headcount reductions within our Engraving segment.   We expect to incur restructuring costs of approximately $1.1 million throughout the remainder of fiscal year 2022 as we continue to focus our efforts to reduce cost and improve productivity across our businesses, particularly through headcount reductions and productivity initiatives.   27     Acquisition Related Expenses   We incurred acquisition related expenses of $0.9 million in the second quarter of fiscal year 2022 and $1.1 million for the six months ended December 31, 2021. Acquisition related expenses typically consist of due diligence, integration, and valuation expenses incurred in connection with recent or pending acquisitions.   Income from Operations   Income from operations for the second quarter of fiscal year 2022 was $21.8 million, compared to $16.7 million during the prior year quarter.  The increase of $5.1 million, or 30.1%, is primarily due to organic sales growth, productivity and cost savings initiatives, offset by increases in material costs.   Income from operations for the six months ended December 31, 2021 was $44.6 million, compared to $31.1 million during the prior year quarter.  The increase of $13.5 million, or 43.4%, is primarily due to organic sales growth, productivity and cost savings initiatives, offset by increases in material costs.   Interest Expense   Interest expense for the second quarter of fiscal year 2022 was $1.5 million, a 4.7% decrease from interest expense of $1.6 million during the prior year quarter. Interest expense for the six months ended December 31, 2021 was $3.2 million, a 5.2% increase from interest expense of $3.1 million during the prior year. Our effective interest rate in the second quarter of fiscal year 2022 was 2.62%.     Income Taxes   Our effective tax rate from continuing operations for the second quarter of fiscal year 2022 and for the six months of the fiscal year ending June 30, 2022 was 24.7% and 24.8%, respectively compared with 21.0% and 24.8% for the prior year quarter and prior year period, respectively. The tax rate was impacted in the current period by the following items: (i) a discrete tax benefit related to equity compensation, (ii) the jurisdictional mix of earnings, (iii) foreign withholding taxes, and (iv) reduction of global intangible low-taxed income.   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. Backlog orders are not necessarily an indicator of future sales levels because of variations in lead times and customer production demand pull systems, with the exception of Engineering Technologies. Customers may delay delivery of products or cancel orders prior to shipment, subject to possible cancellation penalties. Due to the nature of long-term agreements in the Engineering Technologies segment, the timing of orders and delivery dates can vary considerably resulting in significant backlog changes from one period to another.          As of December 31, 2021     As of December 31, 2020       Total Backlog     Backlog under 1 year     Total Backlog     Backlog under 1 year   Electronics   $ 153,080     $ 143,485     $ 77,243     $ 76,190   Engraving     26,260       20,666       23,194       15,710   Scientific     7,973       7,973       9,849       9,849   Engineering Technologies     58,532       46,681       87,984       56,495   Specialty Solutions     48,590       45,377       17,746       14,262   Total   $ 294,435     $ 264,182     $ 216,016     $ 172,506       28     Total backlog realizable under one year increased $91.7 million, or 53.1%, to $264.2 million at December 31, 2021 from $172.5 million at December 31, 2020. Electronics backlog increased 98% in all geographic markets in response to the beginning of the global recovery from the pandemic and new business opportunities. Backlog declines in the Engineering Technologies segment are primarily due to the divestiture of Enginetics and the weakening demand in the commercial aviation sector due to COVID-19 pandemic related slowdowns in that industry.   Changes in backlog under one year are as follows (in thousands):     As of   (In thousands)   December 31, 2021   Backlog under 1 year, prior year period   $ 172,506   Components of change in backlog:         Organic change     106,226   Effect of divestiture     (14,550 ) Backlog under 1 year, current period   $ 264,182       Segment Analysis   Overall   Looking forward to the remainder of fiscal year 2022, we expect to be well positioned to build on fiscal year 2021 and the six months ended December 31, 2021 momentum, with anticipated year over year improvement in key financial metrics, supported by orders growth and productivity initiatives.   In general for fiscal year 2022, we continue to expect:      ● continued end market strength in reed switch and relay products as well as growth in magnetics in our Electronics segment;   ● an increase in soft trim demand in our Engraving segment;   ● a decline in demand for COVID-19 related vaccine storage in our Scientific segment;   ● continued strength in the commercial aviation market and growth in the space market in our Engineering Technologies segment; and   ● continued recovery in the food service market in our Specialty Solutions segment.   Electronics Group       Three Months Ended             Six Months Ended               December 31,     %     December 31,     %   (In thousands, except percentages)   2021     2020     Change     2021     2020     Change   Net sales   $ 76,626     $ 60,156       27.4 %   $ 152,462     $ 115,427       32.1 % Income from operations     17,157       9,962       72.2 %     35,430       18,497       91.5 % Operating income margin     22.4 %     16.6 %             23.2 %     16.0 %           Net sales in the second quarter of fiscal year 2022 increased $16.5 million, or 27.4%, when compared to the prior year quarter.  Organic sales increased by $16.8 million or 27.9%, reflecting a broad-based geographical recovery with a strengthening in demand for all product groups including relays in renewable energy and electric vehicle applications as well as reed switch demand in transportation end markets and the impacts of pricing actions. The foreign currency impact decreased sales by $0.3 million, or 0.5%.    Income from operations in the second quarter of fiscal year 2022 increased by $7.2 million, or 72.2%, when compared to the prior year quarter. The operating income increase was the result of organic sales growth, various price actions and cost saving initiatives, partially offset by material and freight cost increases.   Net sales in the six months ended December 31, 2021 increased $37.0 million, or 32.1%, when compared to the prior year period. Organic sales increased by $36.7 million or 31.8%, reflecting a broad-based geographical recovery with a strengthening in demand for all product groups including relays in renewable energy and electric vehicle applications as well as reed switch demand in transportation end markets and the impact of pricing actions. The foreign currency impact increased sales by $0.3 million, or 0.2%.    Income from operations in the six months ended December 31, 2021 increased by $16.9 million, or 91.5% when compared to the prior year period. The operating income increase was the result of organic sales growth, various price actions and cost saving initiatives, partially offset by material cost increases.   29     Sequentially during the third quarter of fiscal year 2022, we expect a slight increase in revenue and operating margin mostly due to positive end market demand and associated operating leverage.   Engraving Group       Three Months Ended             Six Months Ended               December 31,     %     December 31,     %   (In thousands, except percentages)   2021     2020     Change     2021     2020     Change   Net sales   $ 36,644     $ 37,950       (3.4 %)   $ 71,814     $ 74,351       (3.4 %) Income from operations     5,204       6,501       (20.0 %)     10,078       12,374       (18.6 %) Operating income margin     14.2 %     17.1 %             14.0 %     16.6 %           Net sales in the second quarter of fiscal year 2022 decreased by $1.3 million, or 3.4%, when compared to the prior year quarter. Organic sales decreased by $1.4 million, or 3.8%, as a result of timing of projects and geographic mix. The sales decline was offset by foreign exchange impacts of $0.1 million, or 0.3%.    Income from operations in the second quarter of fiscal year 2022 decreased by $1.3 million, when compared to the prior year quarter.  Operating income declined during the quarter reflecting the timing of projects and geographic mix.   Net sales in the six months ended December 31, 2021 decreased by $2.5 million, or 3.4%, when compared to the prior year period. Organic sales decreased by $3.7 million, or 5.0% as a result of timing of projects.  The sales decline was offset by foreign exchange impacts of $1.1 million, or 1.5%.   Income from operations in  the six months ended December 31, 2021 decreased by $2.3 million, when compared to the prior year period.  Operating income decreased during the period due to the volume decline, partially offset by productivity initiatives.   Sequentially during the third quarter of fiscal year 2022, we expect revenue and operating margin to be similar due to a decrease in project work in Asia, associated with the Chinese New Year, offset by contribution from projects in Europe and growth in soft trim sales.     Scientific       Three Months Ended             Six Months Ended               December 31,     %     December 31,     %   (In thousands, except percentages)   2021     2020     Change     2021     2020     Change   Net sales   $ 24,636     $ 17,893       37.7 %   $ 46,165     $ 34,556       33.6 % Income from operations     5,490       4,234       29.7 %     9,998       8,310       20.3 % Operating income margin     22.3 %     23.7 %             21.7 %     24.0 %           Net sales in the second quarter of fiscal year 2022 and for the six month period ended December 31, 2021 increased by $6.7 million and $11.6 million, respectively, when compared to the prior year quarter and year to date periods. The net sales increase reflects overall growth in end markets, such as pharmaceutical channels, clinical settings, and academic laboratories, including continued strong demand for cold storage surrounding COVID-19 vaccine distribution and the general market recovery as well as pricing actions.   Income from operations in the second quarter of fiscal year 2022 and for the six month period ended December 31, 2021 increased $1.3 million and $1.7 million, respectively, when compared to the prior year quarter and year to date periods. The increase reflects revenue growth and pricing actions partially offset by higher freight costs and investments in new product development.   Sequentially during the third quarter of fiscal year 2022, we expect a moderate decline in revenue and operating margin due to lower volume. 30     Engineering Technologies Group       Three Months Ended             Six Months Ended               December 31,     %     December 31,     %   (In thousands, except percentages)   2021     2020     Change     2021     2020     Change   Net sales   $ 18,095     $ 17,507       3.4 %   $ 35,668     $ 35,140       1.5 % Income from operations     2,314       1,363       69.8 %     3,213       1,831       75.5 % Operating income margin     12.8 %     7.8 %             9.0 %     5.2 %           Net sales in the second quarter of fiscal year 2022 increased by $0.6 million, or 3.4%, compared to the prior year quarter. Sales in the prior year quarter included revenue of $2.3 million related to our divested Enginetics business.  Excluding the impact of the divestiture, sales increased $2.9 million or 19.0% primarily due to recovering demand in the commercial aviation industry and growth in the power generation end market.   Income from operations increased in the second quarter of fiscal year 2022 compared to the prior year period primarily due to recovery in commercial aviation end markets, along with the absences of losses associated with the Enginetics business.   Net sales in the six months ended December 31, 2021 increased by $0.5 million, or 1.5%, compared to the prior year period. Sales in the prior year period included revenue of $5.4 million related to our divested Enginetics business.  Excluding the impact of the divestiture, sales increased $5.9 million primarily due to recovering demand in the commercial aviation industry, growth in the power generation end market, along with an increase in sales into the space end market, particularly related to commercialization of space.     Income from operations increased in the six months ended December 31, 2021 compared to the prior year period primarily due to productivity and cost savings measures implemented during the pandemic and maintained as economic activity resumed along with the absences of losses associated with the Enginetics business, offset by a $1.1 million one-time project-related charge during the first quarter.   Sequentially during the third quarter of fiscal year 2022, we expect revenue to remain similar or slightly higher due to strength in the space and medical end markets. Operating margin is expected to increase slightly to moderately due to end market strength and ongoing productivity initiatives.     Specialty Solutions Group       Three Months Ended             Six Months Ended               December 31,     %     December 31,     %   (In thousands, except percentages)   2021     2020     Change     2021     2020     Change   Net sales   $ 29,708     $ 22,777       30.4 %   $ 55,210     $ 48,095       14.8 % Income from operations     3,738       3,211       16.4 %     6,553       7,117       (7.9 %) Operating income margin     12.6 %     14.1 %             11.9 %     14.8 %           Net sales in the second quarter of fiscal year 2022 increased $6.9 million or 30.4% when compared to the prior year quarter. Organic sales increased $7.1 million, or 30.0%. Increased sales volume is primarily due to positive trends in food services, specialty retail and refuse end markets, as well as various pricing actions.    Income from operations increased $0.5 million or 16.4% in the second quarter of fiscal year 2022 when compared to the prior year quarter primarily as a result of volume and pricing actions, partially offset by higher labor costs, raw material and ocean freight costs.   Net sales in the six months ended December 31, 2021 increased $7.1 million or 14.8% when compared to the prior year period. Organic sales increased $7.3 million, or 15.2%. Increased sales volume is primarily due to a continued recovery in the Pumps and Merchandising businesses and pricing actions, partially offset by the impact of a temporary work stoppage which was resolved during the first quarter.   Income from operations decreased $0.6 million or 7.9% in the six months ended December 31, 2021 when compared to the prior year period primarily as a result of higher costs of labor, including a temporary work stoppage in the first quarter and higher raw material and ocean freight costs, partially offset by pricing actions.   Sequentially during the third quarter of fiscal year 2022, we expect a slight to moderate revenue and operating margin increase reflecting strength in backlog and end market trends.   31     Corporate and Other       Three Months Ended             Six Months Ended               December 31,     %     December 31,     %   (In thousands, except percentages)   2021     2020     Change     2021     2020     Change   Income (loss) from operations:                                                 Corporate   $ (8,662 )   $ (7,454 )     16.2 %   $ (16,546 )   $ (14,445 )     14.5 % Restructuring     (843 )     (509 )     65.6 %     (1,283 )     (1,996 )     (35.7 %) Acquisition related costs     (925 )     (570 )     62.3 %     (1,142 )     (596 )     91.6 % Other income (expense), net     (1,700 )     -       100.0 %     (1,700 )     -       100.0 %   Corporate expenses in the second quarter of fiscal year 2022 increased by 16.2% when compared to the prior year quarter. The increase reflects increases in employee related compensation and research and development costs.   Corporate expenses in the six months ended December 31, 2021 increased by 14.5% when compared to the prior year period. The increase reflects increases in employee related compensation and research and development costs.   The restructuring and acquisition related costs have been discussed above in the Company Overview. The increase in other expenses reflects a $1.7 million litigation accrual in the second quarter of fiscal year 2022.   Discontinued Operations   In pursuing our business strategy, the Company may divest certain businesses.  Future divestitures may be classified as discontinued operations based on their strategic significance to the Company. Net loss from discontinued operations was $0.0 million and $0.6 million for the three months ended  December 31, 2021 and December 31, 2020 respectively. Net loss from discontinued operations was $0.0 million and $1.3 million for the six months ended December 31, 2021 and December 31, 2020 respectively.     Liquidity and Capital Resources   At December 31, 2021, our total cash balance was $147.2 million, of which $100.0 million was held by foreign subsidiaries.  During the second quarter and in the first six months of fiscal year 2022, we repatriated $15.9 million to the United States from our foreign subsidiaries. We expect to repatriate between $15.0 million and $20.0 million during the second half of fiscal year 2022, however, the amount and timing of cash repatriation during the fiscal year will be dependent upon each business unit’s operational needs including requirements to fund working capital, capital expenditures, and jurisdictional tax payments. The repatriation of cash balances from certain of our subsidiaries could have adverse tax consequences or be subject to capital controls; however, those balances are generally available without legal restrictions to fund ordinary business operations.   Net cash provided by continuing operating activities for the six months ended December 31, 2021, was $36.7 million compared to net cash provided by continuing operating activities of $31.5 million in the prior year.  We generated $20.2 million from income statement activities and used $14.3 million of cash to fund working capital and other balance sheet increases.  Cash flow used in investing activities for the six months ended December 31, 2021 totaled $8.1 million and primarily consisted of $9.7 million used for capital expenditures and $1.6 million generated by sales of property, plant, and equipment. Cash used by financing activities for the six months ended December 31, 2021 was $15.6 million and consisted primarily of purchases of stock of $9.5 million, cash paid for dividends of $6.0 million, and contingent consideration payments due to the seller of the Renco business of $1.2 million.   During the second quarter of fiscal year 2019, we entered into a five-year Amended and Restated Credit Agreement (“credit agreement”, or “facility”) with a borrowing limit of $500 million.  The facility can be increased by an amount of up to $250 million, in accordance with specified conditions contained in the agreement.  The facility also includes a $10 million sublimit for swing line loans and a $35 million sublimit for letters of credit.    Under the terms of the Credit Facility, we pay a variable rate of interest and a commitment fee on borrowed amounts as well as a commitment fee on unused amounts under the facility.  The amount of the commitment fee depends upon both the undrawn amount remaining available under the facility and the Company’s funded debt to EBITDA (as defined in the agreement) ratio at the last day of each quarter.  As our funded debt to EBITDA ratio increases, the commitment fee increases.    32     Funds borrowed under the facility may be used for the repayment of debt, working capital, capital expenditures, acquisitions (so long as certain conditions, including a specified funded debt to EBITDA leverage ratio is maintained), and other general corporate purposes.  As of December 31, 2021, the Company used $6.1 million against the letter of credit sub-facility and had the ability to borrow $281.2 million under the facility based on our current trailing twelve-month EBITDA.  The facility contains customary representations, warranties and restrictive covenants, as well as specific financial covenants. The Company’s current financial covenants under the facility are as follows:   Interest Coverage Ratio - The Company is required to maintain a ratio of Earnings Before Interest and Taxes, as Adjusted (“Adjusted EBIT per the Credit Facility”), to interest expense for the trailing twelve months of at least 2.75:1.  Adjusted EBIT per the Credit Facility specifically excludes extraordinary and certain other defined items such as cash restructuring and acquisition related charges up to the lower of $20.0 million or 10% of EBITDA.  The facility also allows for unlimited non-cash charges including purchase accounting and goodwill adjustments.  At December 31, 2021, the Company’s Interest Coverage Ratio was 14.7.   Leverage Ratio - The Company’s ratio of funded debt to trailing twelve month Adjusted EBITDA per the Credit Facility, calculated as Adjusted EBIT per the Credit Facility plus depreciation and amortization, may not exceed 3.5:1.  Under certain circumstances in connection with a Material Acquisition (as defined in the Facility), the Facility allows for the leverage ratio to go as high as 4.0:1 for a four-fiscal quarter period.  At December 31, 2021, the Company’s Leverage Ratio was 1.20.   As of December 31, 2021, we had borrowings under our facility of $200.0 million. In order to manage our interest rate exposure on these borrowings, we are party to $200.0 million of active floating to fixed rate swaps.  These swaps convert our interest payments from LIBOR to a weighted average fixed rate of 1.27%.  The effective rate of interest for our outstanding borrowings, including the impact of the interest rate swaps, was 2.62%.   Our primary cash requirements in addition to day-to-day operating needs include interest payments, capital expenditures, acquisitions, share repurchases, and dividends.  Our primary sources of cash for these requirements are cash flows from continuing operations and borrowings under the facility.  We expect fiscal year 2022 capital spending to be between $25.0 million and $30.0 million which includes amounts not spent in fiscal year 2021.  We also expect that fiscal year 2022 depreciation and amortization expense will be an estimated $21.0 million and $12.0 million, respectively.   The following table sets forth our capitalization:     (In thousands)   December 31, 2021     June 30, 2021   Long-term debt   $ 199,660     $ 199,490   Less cash and cash equivalents     (147,155 )     (136,367 ) Net debt     52,505       63,123   Stockholders' equity     523,450       506,425   Total capitalization   $ 575,955     $ 569,548     We sponsor a number of defined benefit and defined contribution retirement plans.  The U.S. pension plan is frozen for substantially all participants.  We have evaluated the current and long-term cash requirements of these plans, and our existing sources of liquidity are expected to be sufficient to cover required contributions under ERISA and other governing regulations.   The fair value of the Company's U.S. defined benefit pension plan assets was $211.5 million at December 31, 2021, as compared to $212.6 million at the most recent measurement date, which occurred as of June 30, 2021. The next measurement date to determine plan assets and benefit obligations will be on June 30, 2022.   The Company expects to pay $0.5 million in contributions to its defined benefit plans during the remainder of fiscal year 2022. Contributions of $0.1 million and $0.1 million were made during the three and six months ended December 31, 2021 compared to $4.8 million and $4.9 million during the three and six months ended December 31, 2020, respectively. The Company does not expect to make additional contributions during fiscal year 2022 to its U.S. defined benefit plan.  The Company expects to make contributions during fiscal year 2022 of $0.1 million and $0.3 million to its unfunded defined benefit plans in the U.S. and Germany, respectively.  Any subsequent plan contributions will depend on the results of future actuarial valuations.   We have an insurance program in place to fund supplemental retirement income benefits for four retired executives.  Current executives and new hires are not eligible for this program.  At December 31, 2021, the underlying policies had a cash surrender value of $10.6 million and are reported net of loans of $9.1 million for which we have the legal right of offset, these amounts are reported net on our balance sheet.   33     Other Matters   Inflation – Certain of our expenses, such as wages and benefits, occupancy costs, freight and equipment repair and replacement, are subject to normal inflationary pressures. Inflation for medical costs can impact both our employee benefit costs as well as our reserves for workers' compensation claims. We monitor the inflationary rate and make adjustments to reserves whenever it is deemed necessary. Our ability to control worker compensation insurance medical cost inflation is dependent upon our ability to manage claims and purchase insurance coverage to limit the maximum exposure for us. Each of our segments is subject to the effects of changing raw material costs caused by the underlying commodity price movements. We have experienced price fluctuations for a number of materials including rhodium, steel, and other metal commodities. These materials are some of the key elements in the products manufactured in these segments.  Wherever possible, we will implement price increases to offset the impact of changing prices.  The ultimate acceptance of these price increases will be impacted by our affected divisions’ respective competitors and the timing of their price increases. In general, we do not enter into purchase contracts that extend beyond one operating cycle. While Standex considers our relationship with our suppliers to be good, there can be no assurances that we will not experience any supply shortage.   Foreign Currency Translation – Our primary functional currencies used by our non-U.S. subsidiaries are the Euro, British Pound Sterling (Pound), Japanese (Yen), and Chinese (Yuan).   Defined Benefit Pension Plans  – We record expenses related to these plans based upon various actuarial assumptions such as discount rates, mortality rates, and assumed rates of returns.  The Company’s pension plan is frozen for substantially all eligible U.S. employees and participants in the plan ceased accruing future benefits.    Environmental Matters – To the best of our knowledge, we believe that we are presently in substantial compliance with all existing applicable environmental laws and regulations and do not anticipate any instances of non-compliance that will have a material effect on our future capital expenditures, earnings or competitive position.   Seasonality – We are a diversified business with generally low levels of seasonality.   Employee Relations – The Company has labor agreements with several union locals in the United States and several European employees belong to European trade unions.      Critical Accounting Policies   The condensed consolidated financial statements include the accounts of Standex International Corporation and all of its subsidiaries. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying condensed consolidated financial statements.  Although we believe that materially different amounts would not be reported due to the accounting policies adopted, the application of certain accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates.  Our Annual Report on Form 10-K for the year ended June 30, 2021 lists a number of accounting policies which we believe to be the most critical.   34     ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   Risk Management   We are exposed to market risks from changes in interest rates, commodity prices and changes in foreign currency exchange.  To reduce these risks, we selectively use, from time to time, financial instruments and other proactive management techniques.  We have internal policies and procedures that place financial instruments under the direction of the Treasurer and restrict all derivative transactions to those intended for hedging purposes only.  The use of financial instruments for trading purposes (except for certain investments in connection with the non-qualified defined contribution plan) or speculation is strictly prohibited.  The Company has no majority-owned subsidiaries that are excluded from the consolidated financial statements.  Further, we have no interests in or relationships with any special purpose entities.    Exchange Rate Risk   We are exposed to both transactional risk and translation risk associated with exchange rates.  The transactional risk is mitigated, in large part, by natural hedges developed with locally denominated debt service on intercompany accounts.  We also mitigate certain of our foreign currency exchange rate risks by entering into forward foreign currency contracts from time to time.  The contracts are used as a hedge against anticipated foreign cash flows, such as loan payments, customer remittances, and materials purchases, and are not used for trading or speculative purposes.  The fair values of the forward foreign currency exchange contracts are sensitive to changes in foreign currency exchange rates, as an adverse change in foreign currency exchange rates from market rates would decrease the fair value of the contracts.  However, any such losses or gains would generally be offset by corresponding gains and losses, respectively, on the related hedged asset or liability.  At December 31, 2021 the fair value, in the aggregate, of the Company’s open foreign exchange contracts was a liability of less than $0.1 million.   Our primary translation risk is with the Euro, British Pound Sterling, Peso, Japanese Yen and Chinese Yuan.  A hypothetical 10% appreciation or depreciation of the value of any these foreign currencies to the U.S. Dollar at December 31, 2021, would not result in a material change in our operations, financial position, or cash flows.  We hedge our most significant foreign currency translation risks primarily through cross currency swaps and other instruments, as appropriate.   Interest Rate Risk   The Company’s effective interest rate on borrowings was 2.62% at December 31, 2021.  Our interest rate exposure is limited primarily to interest rate changes on our variable rate borrowings and is mitigated by our use of interest rate swap agreements to modify our exposure to interest rate movements.  At December 31, 2021, we have $200.0 million of active floating to fixed rate swaps with terms ranging from one to four years.  These swaps convert our interest payments from LIBOR to a weighted average rate of 1.27%.  At December 31, 2021 the fair value, in the aggregate, of the Company’s interest rate swaps was liabilities of $0.1 million. A 25-basis point increase in interest rates would not change our annual interest expense as all of our outstanding debt is currently converted to fixed rate debts by means of interest rate swaps.   Concentration of Credit Risk   We have a diversified customer base. As such, the risk associated with concentration of credit risk is inherently minimized. As of December 31, 2021, no one customer accounted for more than 5% of our consolidated outstanding receivables or of our sales.   Commodity Prices   The Company is exposed to fluctuating market prices for all commodities used in its manufacturing processes.  Each of our segments is subject to the effects of changing raw material costs caused by the underlying commodity price movements.  In general, we do not enter into purchase contracts that extend beyond one operating cycle.  While Standex considers our relationship with our suppliers to be good, there can be no assurances that we will not experience any supply shortage.   The Engineering Technologies, Specialty Solutions, and Electronics segments are all sensitive to price increases for steel and aluminum products, other metal commodities such as rhodium and copper, and petroleum-based products.  We have experienced price fluctuations for a number of materials including rhodium, steel, and other metal commodities.  These materials are some of the key elements in the products manufactured in these segments.  Wherever possible, we will implement price increases to offset the impact of changing prices.  The ultimate acceptance of these price increases, if implemented, will be impacted by our affected divisions’ respective competitors and the timing of their price increases.   35     ITEM 4.     CONTROLS AND PROCEDURES   At the end of the period covered by this Report, the management of the Company, including the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”)). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2021 in ensuring that the information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's ("SEC") rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.   There was no change in the Company's internal control over financial reporting during the quarterly period ended December 31, 2021 that has materially affected or is reasonably likely to materially affect the Company's internal control over financial reporting.   36     PART II. OTHER INFORMATION   Item 5. Unregistered Sales of Equity Securities and Use of Proceeds   (c) The following table provides information about purchases by the Company of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act:   Issuer Purchases of Equity Securities (1) Quarter Ended  December 31, 2021   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   October 1 - October 31, 2021     418     $ 101.30       418     $ 12,526                                     November 1 - November 30, 2021     29       113.14       29       12,522                                     December 1 - December 31, 2021     -       -       -       12,522                                     Total     447     $ 102.07       447     $ 12,522       (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 was 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.   37     Item 6. Exhibits     (a) Exhibits     10.1 Employment Agreement dated July 1, 2021 between the Company and Flavio Maschera   31.1 Principal Executive Officer’s Certification Pursuant to Rule 13a-14(a)/15d-14(a) and Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.   31.2 Principal Financial Officer’s Certification Pursuant to Rule 13a-14(a)/15d-14(a) and Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.   32 Principal Executive Officer and Principal Financial Officer Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.   101 The following materials from this Quarterly Report on Form 10-Q, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to Unaudited Condensed Consolidated Financial Statements.   104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).         ALL OTHER ITEMS ARE INAPPLICABLE     38     SIGNATURES     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.           STANDEX INTERNATIONAL CORPORATION       Date: February 4, 2022 /s/ ADEMIR SARCEVIC     Ademir Sarcevic     Vice President/Chief Financial Officer     (Principal Financial & Accounting Officer)       Date: February 4, 2022 /s/  SEAN C. VALASHINAS     Sean C. Valashinas     Vice President/Chief Accounting Officer/Assistant Treasurer   39