What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-08-04 compared with 2024-08-02 · 130 added, 115 removed, 305 unchanged (45% of the section changed)

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As part of our ongoing strategy:

On February 4, 2025, we acquired McStarlite Co.

("McStarlite"), a leading provider of complex sheet metal aerospace components, financed from our existing Credit Facility.

Its results are reported in the Engineering Technologies segment beginning in the third quarter of fiscal year 2025.

On November 18, 2024, we acquired Nascent Technology Manufacturing, which designs and produces high-reliability magnetics components for critical defense and industrial applications.

Its results are reported in the Electronics segment beginning in the second quarter of fiscal year 2025.

On November 14, 2024, we acquired Custom Biogenic Systems, it specializes in the development and manufacturing of advanced cryogenic equipment, including unique isothermal freezers with dry liquid nitrogen technology, to the pharmaceutical and biobank end markets within life sciences.

Its results are reported in the Scientific segment beginning in the second quarter of fiscal year 2025.

On October 28, 2024, we acquired the Amran/Narayan Group in cash and stock transactions.

These transactions represent a combined enterprise value of approximately $467.5 million, comprised of 85% cash and 15% in Standex common stock for Amran Instrument Transformers and 90% cash and 10% in Standex common stock for Narayan Powertech Pvt.

The 10% share exchange related to Narayan Powertech Pvt.

is subject to India regulatory approval, which is still pending.

The cash consideration of the transactions was financed using cash-on-hand, existing credit facilities, and a $250 million 364-day term loan with existing lenders.

We converted the 364-day term loan into an exercise of the accordion feature under our existing credit facilities.

This acquisition significantly expands our sales in the fast-growing, high-margin electrical grid end market and our presence in India.

Its results are reported in the Electronics segment beginning in the second quarter of fiscal year 2025.

On May 3, 2024, we acquired Sanyu Electric Pte Ltd, or SEPL, a privately held distributor of reed relays.

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In the third quarter of fiscal year 2023, we divested our Procon business for $75.0 million.

This transaction reflects the continued simplification of our portfolio and enables greater focus on managing our larger platforms and pursuing growth opportunities.

Proceeds will be deployed towards organic and inorganic initiatives and returning capital to shareholders.

Its results are reported within our Specialty Solutions segment.

This transaction reflected the continued simplification of our portfolio and enabled greater focus on managing our larger platforms and pursuing growth opportunities.

Proceeds were deployed towards organic and inorganic initiatives and returning capital to shareholders.

Its results were reported within our Specialty Solutions segment.

In fiscal year 2023, we received $67.0 million cash consideration and recorded a pre-tax gain on the sale of $62.1 million in the Consolidated Financial Statements.

Cash consideration received at closing excludes amounts held in escrow and was net of closing cash.

In the third quarter of fiscal year 2022, we acquired Sensor Solutions, a designer and manufacturer of customized standard magnetic sensor products including hall effect switch and latching sensors, linear and rotary sensors, and specialty sensors.

Sensor Solutions' customer base in automotive, industrial, medical, aerospace, military and consumer electronics end markets are a strategic fit and expand our presence in these markets.

Sensor Solution's operates one light manufacturing facility in Colorado.

Its results are reported within our Electronics segment.

As a result of these portfolio moves, 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.

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Organic sales change

Net sales increased for fiscal year 2025 by $69.5 million, or 9.6% when compared to the prior year period.

Acquisitions accounted for increased sales of $123.6 million, or 17.2%.

Organic sales decreased by $53.8 million, or 7.5%, due to general economic softness in Europe and North America in the Electronics segment, the impact of National Institutes of Health (NIH) funding cuts in the Scientific segment and continued softness in North America from delays in new platform rollout in the Engraving segment.

Sales include d $184.2 million in th e period attributed to fast growth markets.

New products accounted for 2.5% of sales growth.

Net sales decreased for fiscal year 2024 by $20.4 million, or 2.8%, when compared to the prior year period.

Organic sales decreased by $37.7 million, or 5.1%, due to transitory headwinds in several of our end markets, primarily due to lower demand in our Electronics, Specialty and Scientific segments, partially offset by project timing in our Engineering Technologies group.

Organic sales decreased by $37.7 million, or 5.1%, due to transitory headwinds in several of our end markets, primarily due to lower demand in our Electronics, Scientific and Specialty segments, partially offset by project timing in our Engineering Technologies group.

Organic sales included $94.0 million in the period attributed to fast growth markets.

Acquisitions had a $40.4 million, or 5.5%, positive impact on sales, offset by negative impacts on sales for divestitures of $21.3 million, or 2.9%, and foreign currency of $1.8 million, or 0.3%.

Net sales increased for fiscal year 2023 by $5.7 million, or 0.8%, when compared to the prior year period.

Organic sales increased by $39.6 million, or 5.7% excluding the impact of the Procon divestiture, primarily due to pricing actions and strong demand in our Engraving, Specialty and ETG segments.

Acquisitions had a $1.9 million, or 0.3%, positive impact on sales, offset by negative impacts on sales for divestitures of $11.9 million, or 1.9%, and foreign currency of $23.9 million, or 3.3%.

We discuss our results and outlook for each segment below.

Gross profit in fiscal year 2025 increased to $315.2 million, or a gross margin of 39.9%, as compared to $282.0 million, or a gross margin of 39.1%, for the prior year period.

This increase was a result of higher volume, productivity initiatives and impact of acquisitions partially offset by material inflation.

Gross profit in fiscal year 2024 decreased to $282.0 million, or a gross margin of 39.1%, as compared to $285.1 million, or a gross margin of 38.5%, for the prior year period.

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The decreases were partially offset by contributions from the Minntronix acquisition, pricing actions and productivity initiatives.

Gross profit in fiscal year 2023 increased to $285.1 million, or a gross margin of 38.5%, as compared to $269.9 million, or a gross margin of 36.7%, for the prior year period.

This increase was a result of organic sales increases of $39.6 million and productivity initiatives, which offset approximately $11.4 million of inflationary impacts in the areas of raw material and labor.

Organic sales increases were attributed to $82.5 million to fast growth markets, targeted pricing initiatives in most of our businesses and volume in each business, with the exception of Scientific.

Gross profit was also negatively impacted by the divestiture of the Procon business.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses, (“SG&A”) for the fiscal year 2025 were $193.4 million, or 24.5% of sales, compared to $169.9 million, or 23.5% of sales, during the prior year period.

SG&A expenses during the period were impacted by a reduction in general and administrative expenses partially offset by increased research and development spending.

SG&A expenses during the period were primarily impacted by increased expenses due to the recent acquisitions and increased research and development and selling expenses.

Selling, general, and administrative expenses, (“SG&A”) for the fiscal year 2024 were $169.6 million, or 23.5% of sales, compared to $172.3 million, or 23.3% of sales, during the prior year period.

SG&A expenses during the period were primarily impacted by increased research and development spending to drive future product initiatives.

SG&A expenses during the period were impacted by a reduction in general and administrative expenses partially offset by increased research and development spending.

Restructuring Costs

During fiscal year 2024, we incurred restructuring expenses of $8.2 million, primarily related to facility rationalization activities, and global headcount reductions primarily within our Engraving, Electronics and Engineering Technologies segments and as well as the Corporate headquarters.

During fiscal year 2023, we incurred restructuring expenses of $3.8 million, primarily related to productivity improvements, facility rationalization activities, and global headcount reductions primarily within our Engraving and Electronics segments and Corporate headquarters.

(Gain) Loss on Sale of Business

We recorded a pre-tax gain on sale of the Procon business of $62.1 million for fiscal year 2023.

The goodwill balance of $0.2 million was written off as a part of the transaction.

The sale transaction and financial results of Procon are classified as continuing operations in the Consolidated Financial Statements.

We recorded an additional pre-tax gain on sale of the Procon business of $0.3 million for fiscal year 2024 due to closing cash adjustments.

During fiscal year 2025, we incurred restructuring expenses of $6.9 million, primarily related to facility rationalization activities, and global headcount reductions mostly within our Engraving segment.

During fiscal year 2024, we incurred restructuring expenses of $8.2 million, primarily related to facility rationalization activities, and global headcount reductions primarily within our Electronics, Engineering Technologies and Engraving segments and as well as the Corporate headquarters.

Acquisition Related Costs

We incurred acquisition related expenses of $2.6 million and $0.6 million in fiscal year 2024 and 2023, respectively.

We incurred acquisition related expenses of $21.4 million and $2.6 million in fiscal year 2025 and 2024, respectivel y.

Acquisition related costs typically consist of due diligence, integration, and valuation expenses incurred in connection with recent or pending acquisitions.

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We recorded a charge of $0.1 million for settlement of an environmental remediation claim in the third quarter of fiscal year 2024.

We incurred expense of $5.7 million in fiscal year 2022 related to a litigation accrual.

In the third quarter of fiscal year 2023, we received $1.0 million from our insurance provider as recoupment related to this litigation matter.

Refer to Part II, Item 8, Note 12, "CONTINGENCIES," in the Notes to the Consolidated Financial Statements for details.

Income from Operations

Income from operations for the fiscal year 2025 was $93.5 million, compared to $101.7 million during the prior year.

The decrease of $8.2 million, or 8.0%, is primarily due to increase of acquisition costs and administrative expenses which more than offset the income from the increase in sales from recent acquisitions.

Income from operations for the fiscal year 2024 was $101.7 million, compared to $171.1 million during the prior year.

The decrease of $69.4 million, or 40.5%, is primarily due to the gain on the divestiture of Procon in the third quarter of the fiscal year 2023, organic sales decreases and increased investment in research and development spending, restructuring and acquisition related costs.

The decreases are partially offset by cost reduction activities and productivity improvement initiatives.

Income from operations for the fiscal year 2023 was $171.1 million, compared to $88.3 million during the prior year.

The increase of $82.8 million, or 93.8%, is primarily due to the divestiture of the Procon business for a gain of $62.1 million as well as income from organic sales increases and pricing actions, along with cost reduction activities and productivity improvement initiatives, partially offset by foreign currency, material inflation, and increased logistics and labor costs.

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

Interest Expense

Interest expense for fiscal year 2024 was $4.5 million, a decrease of $0.9 million as compared to the prior year.

Our effective interest rate was 2.46%.

Interest expense for fiscal year 2025 was $23.9 million, an increase of $19.3 million as compared to the prior year.

The increase in interest expense in fiscal 2025was due to increased debt to fund fiscal 2025 acquisitions.

Our effective interest rate in fiscal 2025 was 6.38%.

Interest expense for fiscal year 2024 was $4.5 million, a decrease of $0.9 million as compared to the prior year.

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The income tax provision from continuing operations for the fiscal year ended June 30, 2025 was impacted by the following items:

(i) a tax provision of $5.8 million due to the mix of income in various jurisdictions, (ii) tax benefits of $4.7 million related to foreign tax credits of $2.1 million, as well as Federal R&D tax credits of $2.5 million, (iii) a tax provision of $1.8 million related to officers’ compensation, (iv) a tax provision of $3.0 million related to cash repatriation, and (v) a tax benefit of $9.1 million (inclusive of $1.2 million of interest) related to the release of a Sec.

965 toll tax uncertain tax position due to the lapse of statute of limitations.

The income tax provision from continuing operations for the fiscal year ended June 30, 2024 was impacted by the following items:

(i) a tax provision of $3.1 million due to the mix of income in various jurisdictions, (ii) tax benefits of $2.8 million related to foreign tax credits of $0.7 million, as well as Federal R&D tax credits of $2.1 million, (iii) a tax provision of $3.8 million related to officers’ compensation, and (iv) a tax benefit of $3.8 million relating to share-based compensation.

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tax effects of international operations, and (iv) a tax benefit of $5.0 million relating to the partial release of the valuation allowance on capital loss carryforwards, which were utilized against the capital gain recognized on the divestiture of the Procon business.

The income tax provision from continuing operations for the fiscal year ended June 30, 2022 was impacted by the following items:

(i) a tax provision of $4.3 million due to the mix of income in various jurisdictions, (ii) a tax benefit of $2.2 million related to Federal R&D credit and Foreign Tax Credit, (iii) a tax benefit of $1.3 million related to return-to-accrual adjustments to true-up prior-period provision amounts, and (iv) a tax expense of $1.0 million related to uncertain tax position.

In December 2021, the Organization for Economic Cooperation and Development (“OECD”) published a proposal for the establishment of a global minimum tax rate of 15% (the “Pillar Two rule”).

The OECD has recommended that the Pillar Two rule become effective for fiscal years beginning after January 1, 2024.

To date, member states are in various stages of implementation and the OECD continues to refine technical guidance.

We are closely monitoring developments of the Pillar Two rule and are currently evaluating the potential impacts in each of the countries in which we operate;

however, we currently do not expect the Pillar Two rule to have a material impact on our effective tax rate.

On July 4, 2025, the U.S.

government enacted The One Big Beautiful Bill Act of 2025 which includes, among other provisions, changes to the U.S.

corporate income tax system including the allowance of immediate expensing of qualifying research and development expenses and permanent extensions of certain provisions within the Tax Cuts and Jobs Act.

Certain provisions are effective beginning fiscal 2026.

We are evaluating the future impact of these tax law changes on our financial statements

The Organization for Economic Co-operation and Development (OECD) and the G20 Inclusive Framework on Base Erosion and Profit Shifting (the "Inclusive Framework") have put forth Pillar Two proposals that ensure a minimal level of taxation.

Several countries in which the Company operates, including several European Union member states, have adopted domestic legislation to implement the Inclusive Framework's global corporate minimum tax rate of fifteen percent.

This legislation became effective for the Company beginning July 1, 2024.

Based on the Company's analysis of Pillar Two provisions, these tax law changes did not have a material impact on the Company's financial statements for fiscal 2025.

Capital Expenditures

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Specialty Solutions

Total backlog realizable within one year decreased $52.8 million, or 22.2% to $185.2 million at June 30, 2024 from $238.1 million at June 30, 2023.

Total backlog realizable within one year increased $60.3 million, or 32.5% to $245.6 million at June 30, 2025 from $185.2 million at June 30, 2024.

Changes in backlog under 1 year are as follows (in thousands):

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Overall Outlook

Looking forward to fiscal year 2025, we expect to be well-positioned for growth in the second half of the year, with anticipated continued improvement in general market conditions supported by planned new product releases in each segment throughout the year.

Looking forward to fiscal year 2026, barring any unforeseen economic, global trade, or tariff related disruptions, we expect revenue to grow by over $100 million, primarily driven by mid-to-high-single-digit organic growth in Electronics, double-digit organic growth in Engineering Technologies, and the contribution from recent acquisitions.

We plan to release over fifteen new products which are projected to contribute approximately 300 bps of incremental growth.

Sales from fast growth markets are expected to grow approximately 45% year-on-year and exceed $265 million.

In fiscal year 2026, the Company is on track to further reduce its net debt to EBITDA ratio, positioning the Company well to fund future organic and inorganic opportunities.

In general, for fiscal year 2026, we expect:

continued growth in transportation markets from hybrid and electric vehicle program with a ramp up of new business opportunities;

soft trim end market growth in APAC;

vaccine and cold storage demand to remain stable;

commercial aviation, space and defense end markets demand to increase based on current program expectations and new product development;

space markets to remain attractive, with volume to slightly increase from fiscal year 2023 due to new product development for existing customers;

refuse and dump end markets to remain stable while being supported by future investments in the U.S.

infrastructure bill;

increased exposure to the high growth, high margin electrical grid end market as a result of the Amran/Narayan Group acquisiti on;

growth of new product sales to continue to accelerate as recently released products continue to ramp and new products slated for release in 2026 enter the market

commercial aviation and defense end markets demand to increase based on current program expectations and new product develop ment;

space markets to remain attractive, with volume to slightly increase from fiscal year 2025 due to new product development for existing customer;

continued stability in hybrid and electric vehicle programs despite softness in general automotive end markets and planned new platform launches;

scientific cold storage demand to decline due to anticipated effects of NIH funding cuts;

refuse and dump end markets to remain stable;

stable demand levels in food service equipment markets.

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Net sales in fiscal year 2025 increased $78.2 million, or 24.3%, when compared to the prior year.

Organic sales decreased by $22.7 million, or 7.4%, due to continued softness in China and Europe, primarily in appliances and general industrial end markets.

The foreign currency impact decreased sales by $1.6 million, or 0.5%, partially offset by the Minntronix, Sanyu and SEPL acquisitions in fiscal year 2024, which contributed $40.4 million, or 13.2%, in sales for the period.

Income from operations in the fiscal year 2024 decreased $4.9 million, or 7.2%, when compared to the prior year.

The operating income decrease was the result of lower sales, a change in product mix and foreign currency impacts, partially offset by contributions from the recent acquisitions, and realization of pricing and productivity initiatives.

In the first quarter of fiscal year 2025, on a sequential basis, we expect similar to slightly higher revenue, driven by higher sales into fast growth end markets, and similar operating margin, as higher investments in selling, marketing and R&D offset pricing and productivity initiatives.

Acquisitions added $104.4 million, or 32.4% to net sales in 2025.

Organic sales decreased by $26.8 million, or 8.3%, due to general market softness in Europe and North America.

Declines occurred across most markets, particularly industrial applications, transportation and utilities.

The foreign currency impact increased sales by $0.6 million, or 0.2%.

The Amran Narayan acquisition took place in 2025 while the 2024 acquisitions included Minntronix, Sanyu and SEPL.

Income from operations in the fiscal year 2025 increased $23.9 million, or 37.3%, when compared to the prior year.

Acquisitions contributed $25.8 million income from operations.

Pricing, and productivity initiatives, and favorable product mix were partially offset by lower core volume.

Net sales in fiscal year 2024 increased 16.1 million, or 5.3%, when compared to the prior year.

Organic sales increased by $13.7 million, or 4.5%, reflecting positive trends in end markets like industrial applications, power management, renewable energy technologies, and electric vehicle related applications.

Sensor Solutions was acquired in the third quarter of fiscal year 2022, adding $1.9 million, or 0.6%, in sales for the period.

Organic sales decreased by $22.7 million, or 7.4%, reflecting softening within the industrial application, appliance, transportation and utility markets, along with destocking in magnetics.

Such declines were offset some by growth in the military and aerospace markets, along with overall new business opportunities.

The acquisition of Sanyu in the third quarter of fiscal year 2024 and Sanyu Electronics Private Limited (SEPL), the related distribution business located in Singapore, in the fourth quarter added $6.6 million, or 2.2%, in fiscal year 2024.

The acquisition of Minntronix in the first quarter of fiscal year 2024 added $33.8 million, or 11.1% in fiscal year 2024.

The foreign currency impact decreased sales by $1.6 million, or 0.5%.

Income from operations in the fiscal year 2024 decreased $4.9 million, or 7.2% when compared to the prior year.

The operating income decrease was the result of inflationary impacts, mix and foreign exchange offset partially by organic sales growth and various cost saving initiatives.

The operating income decrease was the result of $1.8 million purchase accounting adjustments on both Minntronix and Sanyu along with the operating margin impact on the lower organic sales, mix, among other cost variances offset partially by the acquisition operating margin and various cost saving initiatives.

Engineering Technologies

2025 compared to 2024

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Operating income margin

Net sales in fiscal year 2024 decreased by $1.4 million, or 0.9%, compared to the prior year.

Organic sales decreased by $1.0 million, or 0.7%, as a result of delays in new platform rollouts in North America.

Foreign exchange impacts were $0.4 million, or 0.2%.

Income from operations in fiscal year 2024 increased by $1.2 million, or 4.9%, when compared to the prior year.

Operating income increased during the period reflecting productivity actions, offsetting slower demand in North America sales.

In the first quarter of fiscal year 2025, we expect moderately higher revenue and operating margin due to more favorable project timing in Europe and Asia.

Net sales in fiscal year 2023 increased by $5.8 million or 4.0% compared to the prior year.

Organic sales increased by $14.3 million, or 9.8%, as a result of timing of customer projects.

The organic sales increase was partially offset by foreign exchange impacts of $8.5 million, or 5.8%.

Income from operations in fiscal year 2023 increased by $3.6 million, or 16.7%, when compared to the prior year.

Operating income increased during the period reflecting the organic sales increase and productivity actions, offsetting the foreign exchange impacts.

Net sales in fiscal year 2025 increased $19.1 million, or 22.9%, when compared to the prior year.

Sales increase was attributable to the acquisition of McStarlite which added $11.6 million to revenue and an organic sales increase of $5.8 million, or 8.6% driven by growth in the space and aviation end markets.

Income from operations in fiscal year 2025 increased by $0.2 million, or 1.4% primarily related to the McStarlite acquisition.

This growth is attributed to increased sales volume across the aviation markets and space markets combined with the McStarlite acquisition, and productivity initiatives.

Net sales in fiscal year 2024 increased $2.4 million, or 3.0%, when compared to the prior year.

The organic sales increase was

driven by improvement in the aviation and space end markets, more favorable project timing, and growth in new applications.

Income from operations in fiscal year 2024 increased $4.2 million, or 37.7%, when compared to the prior year.

The increase was primarily due to the impact of pricing and productivity initiatives, partially offset by research and development.

2025 compared to 2024

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Operating income margin

Net sales in fiscal year 2025 increased by $ 3.4 million, or 5.0% when compared to the prior year, due to benefit from the Custom Biogenic Systems acquisition, mostly offset by an organic decline from lower demand at academic and research institutions that were impacted by NIH funding cuts.

Income from operations in fiscal year 2025 decreased by $ 1.5 million, or 8.1% , when compared to the prior year due to organic decline partially offset by contribution from the acquisition and price and productivity initiatives.

Net sales in fiscal year 2024 decreased by $6.0 million, or 8.0% when compared to the prior year.

Net sales decreased reflecting general market softness, including purchases by retail pharmacies.

Income from operations in fiscal year 2024 increased by $1.9 million, or 11.1%, when compared to the prior year.

Income from operations in fiscal year 2024 increased $1.9 million or 11.1%, when compared to the prior year.

Operating income increase reflects productivity initiatives and lower freight costs, partially offset by lower volume.

In the first quarter of fiscal year 2025, on a sequential basis, we expect similar revenue and slightly lower operating margin due to investments in research and development and higher freight cost.

Net sales in fiscal year 2023 increased by $8.9 million, or 10.6% when compared to the prior year.

Net sales decreased as expected due to lower demand for cold storage surrounding COVID-19 vaccine distribution partially offset by pricing actions.

Income from operations in fiscal year 2023 decreased $0.8 million or 4.2%, when compared to the prior year.

Operating income decrease reflects lower sales volume, partially offset by pricing and productivity actions and lower oceanic freight costs.

Engineering Technologies

2025 compared to 2024

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Operating income margin

Net sales in fiscal year 2024 increased $2.4 million, or 3.0%, when compared to the prior year.

The organic sales increase was driven by improvement in the aviation and space end markets, more favorable project timing, and growth in new applications.

Income from operations in fiscal year 2024 increased $4.2 million, or 37.7%, when compared to the prior year.

The increase was primarily due to the impact of pricing and productivity initiatives, partially offset by research and development.

In the first quarter of fiscal year 2025, on a sequential basis, we expect moderately to significantly lower revenue and slightly lower operating margin due to unfavorable project timing.

Net sales in fiscal year 2023 increased $3.0 million, or 3.8%, when compared to the prior year.

Organic sales increased by $4.1 million, or 5.3%, offset by foreign currency impacts of $1.1 million, or 1.5%, as compared to the prior year period.

Organic sales change was primarily due to increases in new product development of new solutions provided to customers in the aerospace and defense markets.

Income from operations in fiscal year 2023 increased $2.3 million, or 25.9%, when compared to the prior year.

The increase was primarily due to productivity initiatives, volume increases and the impact of a one-time project related charge in first quarter of fiscal year 2022 that did not repeat.

Net sales in fiscal year 2025 decreased by $ 22.3 million, or 14.8% , compared to the prior year.

Organic sales decreased by $20.9 million, or 13.9%, primarily as a result of delays in new platform rollouts in North America.

Foreign exchange impacts reduced sales by $1.4 million, or 0.9%.

Income from operations in fiscal year 2025 decreased by $9.1 million, or 33.9%, when compared to the prior year primarily as a result of lower demand in North America, partially offset by productivity actions.

Net sales in fiscal year 2024 decreased by $1.4 million or 0.9% compared to the prior year.

Organic sales decreased by $1.0 million, or 0.7%, as a result of delays in new platform rollouts in North America.

Foreign exchange impacts were $0.4 million, or 0.2%.

Income from operations in fiscal year 2024 increased by $1.2 million, or 4.9%, when compared to the prior year.

Operating income increased during the period reflecting productivity actions, offsetting slower demand in North America sales.

Specialty Solutions

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Operating income margin

Net sales for fiscal year 2025 decreased $8.9 million, or 9.4% when compared to the prior year reflecting general market softness in the Display Merchandising business and in the Hydraulics business.

Income from operations for fiscal year 2025 decreased $4.8 million, or 24.4%, when compared to the prior year due to lower volumes.

Net sales for fiscal year 2024 decreased $31.5 million, or 24.8% when compared to the prior year.

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The decrease is due to the Procon divestiture and lower volume in the Display Merchandising and Hydraulics business, partially offset by improved operating performance in the Display Merchandising business.

In the first quarter of fiscal year 2025, on a sequential basis, we expect similar revenue and operating margin.

Net sales for fiscal year 2023 increased $4.3 million, or 3.5%, when compared to the prior year.

Organic sales increased $16.7 million, or 13.6% excluding Procon, as compared to the prior year period.

The increased sales volume is primarily due to pricing realization, strong market demand and the absence of the labor work stoppage in two plants during the prior year.

The impact of the Procon divestiture partially offset the organics sales increase.

Income from operations for fiscal year 2023 increased $9.8 million, or 62.8%, when compared to the prior year.

Operating income increased due to sales increases in Display Merchandising, pricing actions and the impact of the labor work stoppage in two plants during the prior year.

Corporate, Restructuring and Other

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(in thousands except

Corporate - Income from operations

Gain (loss) on sale of business

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Other operating income (expense), net

Corporate expenses in fiscal year 2025 decreased $0.8 million, or 2.3%, when compared to the prior year, primarily due to reduction in incentive compensation.

Corporate expenses in fiscal year 2024 decreased $3.0 million, or 8.6%, when compared to the prior year.

Corporate expenses in fiscal year 2024 reflect reductions in professional service fees and incentive compensation.

Corporate expenses in fiscal year 2023 increased $0.8 million, or 2.3%, when compared to the prior year, primarily due to employee related compensation accruals and research and development costs.

Corporate expenses in fiscal year 2024 reflect reductions in incentive compensation.

The gain on sale of business, restructuring costs, acquisition-related costs and other operating income (expense), net have been discussed above in the Company Overview.

Discontinued Operations

In pursing our business strategy, the Company may divest certain businesses.

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.

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however, those balances are generally available without legal restrictions to fund ordinary business operations.

Net cash provided by continuing operating activities for the year ended June 30, 2025 was $ 69.6 million compared to net cash provided by continuing operating activities of $ 93.3 million in the prio r year.

We generated $102.0 million from income statement activities and u sed $12.9 million of cash to fund working capital and other balance sheet account increases.

Cash flow used in investing activities for the year ended June 30, 2025 totaled $ 503.4 million.

We used $478.9 million for the purchase of acquisitions in the fiscal year, $28.3 million was used for capital expenditures.

We generated $3.5 million in the fiscal year proceeds from life insurance policies.

Cash provided by financing activities for the year ended June 30, 2025 was $380.5 million and included proceeds from borrowings of $792.3 million, payment of debt of $389 million, stock repurchases of $9.9 million and cash paid for dividends of $ 15.0 million.

Net cash provided by continuing operating activities for the year ended June 30, 2024 was $93.3 million compared to net cash provided by continuing operating activities of $90.8 million in the prior year.

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Cash used by financing activities for the year ended June 30, 2024 was $69.2 million and included stock repurchases of $31.8 million, repayments of debt of $25.0 million and cash paid for dividends of $13.9 million.

Net cash provided by continuing operating activities for the year ended June 30, 2023 was $90.8 million compared to net cash provided by continuing operating activities of $78.1 million in the prior year.

We generated $116.6 million from income statement activities and used $18.2 million of cash to fund working capital and other balance sheet account increases.

Cash flow provided by investing activities for the year ended June 30, 2023 totaled $41.6 million.

We generated $67.0 million in proceeds from the divestiture of the Procon business and $24.3 million was used for capital expenditures.

Cash used by financing activities for the year ended June 30, 2023 was $40.0 million and included stock repurchases of $25.5 million, cash paid for dividends of $13.0 million, contingent consideration payments to the sellers of the Renco business of $1.2 million and debt modification costs of $1.7 million.

We sponsor a number of defined benefit and defined contribution retirement plans.

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During the third quarter of fiscal year 2023, the Company entered into a Third Amended & Restated Credit Agreement which renewed the existing Credit Agreement for an additional five-year period (“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 will pay a variable rate of interest and a fee on borrowed amounts as well as a commitment fee on unused amounts under the facility.

The amount of the commitment fee will depend 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.

Under the terms of the Credit Facility, we pay a variable rate of interest and a 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.

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.

During the second quarter of fiscal year 2025, we entered into a $250 million 364-day term loan with existing lenders.

Also, during the period, we converted the 364-day term loan into an exercise of the accordion feature under our existing credit facilities.

In connection with the conversion of the loan, the Company entered into a Second Amendment to Third Amended and Restated Credit Agreement.

This amendment expanded the total available credit under the Revolving Credit Agreement from $500 million to $825 million.

As of June 30, 2025 , the Company has used $1.9 million against the letter of credit sub-facility and had the ability to borrow $207.7 million under the facility based on our current trailing twelve-month EBITDA.

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As of June 30, 2025, we had borrowings under our facility of $553.2 million.

In order to manage our interest rate exposure on these borrowings, we are party to $150.0 million of active floating to fixed rate swaps.

These swaps convert our interest payments from SOFR to a weighted average rate of 0.85%.

The effective rate of interest for our outstanding borrowings, including the impact of the interest rate swaps, was 2.46%.

The effective rate of interest for our outstanding borrowings is 6.38%.

Our primary cash requirements in addition to day-to-day operating needs include interest payments, capital expenditures, acquisitions, share repurchases, and dividends.

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Total capitalization

Stockholders’ equity increased year over year by $14.0 million, primarily as a result of current year net income of $73.1 million offset by $45.7 million of cash returned to shareholders in the form of dividends and stock repurchases.

Stockholders’ equity increased year over year by $90.2 million, primarily as a result of current year net income of $55.7 million and stock issued for acquisitions of $26 million.

The Company's net (cash) debt to capital percentage changed to (38.6)% as of June 30, 2025 from (0.9)% in the prior year.

At June 30, 2025, we expect to pay estimated interest payments of $176 million within the next five years.

This estimate is based upon effective interest rates as of June 30, 2024 and excludes any interest rate swaps which are assets to us.

This estimate is based upon the loan balance, interest rate, and credit spread as of June 30, 2025.

If we take into consideration the change in credit spread that will take effect in August 2025 and the interest rate at June 30, 2025, then the amount of estimated interest payments for the next five years would be $169 million.

See Item 7A for further discussions surrounding interest rate exposure on our variable rate borrowings.

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Employee Benefit Plans" for additional information regarding these obligations.

At June 30, 2024, we had $39.0 million of operating lease obligations.

A t June 30, 2025 , we had $51.2 million of operating lease obligations.

Financial Statements and Supplementary Data, Note 20.

Leases" for additional information regarding these obligations.

At June 30, 2024 , we had $ 9.8 million of non-current liabilities for uncertain tax positions.

We are not able to provide a reasonable estimate of the timing of future payments related to these obligations.

At June 30, 2025 , w e had $2.9 million of non-current liabilities for uncertain tax positions.

We are not able to pro vide a reasonable estimate of the timing of future payments related to these obligations.

Other Matters

Tariff – Several of our segments may be impacted by recent tariff announcements.

While we cannot predict the impact of potential new tariffs on global trade and economic growth, our regional presence, strong customer relationships, and our disciplined approach to pricing and productivity actions position us well to manage through these challenges.

We monitor the regulatory environment and continue to make adjustments whenever it is deemed necessary.

Most of our supply chain is strategically located to service regional demand.

We plan to continue to invest in our key strategic growth priorities while closely managing our cost structure and driving productivity and pricing actions and seeking alternate sources of supply to further reduce the impact of tariffs as appropriate.

Inflation – Certain of our expenses, such as wages and benefits, occupancy costs, freight and equipment repair and replacement, are subject to normal inflationary pressures.

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Each of our segments is subject to the effects of changing raw material costs caused by the underlying commodity price movements.

In the past year, we have experienced price fluctuations for a number of materials including rhodium, steel, and other metal commodities.

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.

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.

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Foreign Currency Translation – Our primary functional currencies used by our non-U.S.

subsidiaries are the Euro, British Pound Sterling (Pound), Japanese (Yen), Peso and Chinese (Yuan).

subsidiaries are the Euro, British Pound Sterling (Pound), Japanese (Yen), Mexican Peso, Chinese (Yuan), and Indian (Rupee).

Defined Benefit Pension Plans – We record expenses related to these plans based upon various actuarial assumptions such as discount rates and assumed rates of returns.

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We have identified six reporting units for impairment testing:

Electronics, Engraving, Scientific, Engineering Technologies, Federal, and Hydraulics.

Electronics, Engineering Technologies, Scientific, Engraving, Federal, and Hydraulics.

As quoted market prices are not available for the Company’s reporting units, the fair value of the reporting units is determined using a discounted cash flow model (income approach).

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis