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Item 7. Management’s Discussion and Analysis

2026-08-14 compared with 2025-08-04 · 122 added, 122 removed, 313 unchanged (44% of the section changed)

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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 six operating segments that aggregate to five reportable segments.

We have four operating and reportable segments.

Please refer to Item 1.

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As part of our ongoing strategy:

On July 2, 2026, we acquired the remaining 9.9% interest in India-based Narayan Powertech (Narayan), a leading manufacturer of low voltage and medium voltage instrument transformers.

On March 9, 2026, we completed the divestiture of Federal Industries to a third party for cash proceeds of $68.3 million.

The divestiture supports continued portfolio simplification and enables us to focus on larger businesses and fast growth end market opportunities.

Post the divestiture, the Hydraulics business was combined with the Engraving business under the Engraving & Hydraulics segment, and the Engineering Technologies segment was re-named as the Aerospace & Defense (A&D) segment.

We believe that this name change will improve understanding of the business and its end markets.

As a result, the Company now reports under the four operating segments of Electronics, A&D, Scientific, and Engraving & Hydraulics.

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.

Its results are reported in the A&D 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.

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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.

These transactions represented, at the time, a combined enterprise value of approximately $467.5 million, comprised of 85% cash and 15% in Standex common stock for Amran Instrument Transformers and 90.1% cash and 9.9% in Standex common stock for Narayan Powertech Pvt.

The 9.9% share exchange related to Narayan Powertech Pvt.

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

was subject to India regulatory approval.

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.

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Restructuring costs

Acquisition related expenses

Deal related expenses

Other operating (income) expense, net

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Acquisitions accounted for increased sales of $66.4 million, or 8.4%.

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.

Divestitures reduced sales by $12.8 million, or 1.6%.

Organic sales increased by $43.6 million, or 5.5%, primarily due to increased sales into fast growth markets and contributions from new products.

Sales include d $263.8 million in th e period attributed to fast growth markets.

New products accounted for 5.3% 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, 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 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%.

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

New products accounted for 2.5% of sales growth.

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.

Gross profit in fiscal year 2026 increased to $372.0 million, or a gross margin of 41.7%, as compared to $315.2 million, or a gross margin of 39.9%, for the prior year.

The margin increase was a result of higher volume and the continued focus on pricing disciplines and productivity actions.

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.

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.

This decrease was a result of organic sales decreases of $37.6 million, approximately $2.8 million of net inflationary impacts in the areas of labor and raw material and by the divestiture of the Procon business.

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

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 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 impacted by a reduction in general and administrative expenses partially offset by increased research and development spending.

Restructuring Costs

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 $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.

Other Operating (Income) Expense, Net

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

During fiscal year 2026, we incurred restructuring expenses of $12.2 million, primarily related to facility rationalization activities and announced closure of four sites within our Engraving & Hydraulics segment as well as restructuring activities within our Electronics segment.

We expect to continue seeing realization of the benefit of these restructuring actions into fiscal year 2027.

Deal Related Costs

We incurred deal related expenses of $4.1 million and $21.4 million in fiscal year 2026 and 2025, respectivel y.

Deal related costs typically consist of due diligence, advisory, legal, integration, and valuation activities associated with recent or pending acquisitions or divestitures transactions.

Deal related costs were lower in fiscal year 2026 as compared to 2025 mainly due to 2025 acquisitions.

Gain on Sale of Business

During fiscal year 2026, we recorded a gain on the sale of the Federal Industries business of $57.1 million.

The sale transaction and financial results of Federal Industries are classified as continuing operations in the consolidated financial statements.

Income from Operations

Income from operations for the fiscal year 2026 was $193.6 million, compared to $93.5 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.

The increase of $100.0 million, or 106.9%, is primarily due to the gain on the divestiture of Federal Industries, effects of recent acquisitions, productivity improvement initiatives, and lower purchase accounting and deal related costs, partially offset by an increase in administrative and research and development expenses.

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

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

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Interest expense for fiscal year 2026 was $30.7 million, an increase of $6.8 million as compared to the prior year.

The increase in interest expense in fiscal 2026 was primarily due to longer period over which the debt was outstanding in fiscal 2026.

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 2025 was 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.

Our effective interest rate in fiscal 2026 was 5.71% as compared to 6.38% for the fiscal year 2025 .

The reduction in effective interest rate was on account of favorable interest rates in fiscal 2026 and a favorable interest rate swap.

The income tax provision from continuing operations for the fiscal year ended June 30, 2026 was $34.3 million, or an effective rate of 21.02% compared to $11.1 million, or an effective rate of 16.11%, for the year ended June 30, 2025, and $21.5 million, or an effective rate of 22.6%, for the year ended June 30, 2024.

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The income tax provision from continuing operations for the fiscal year ended June 30, 2026 was impacted by the following items:

(i) a tax provision of $8.1 million due to the mix of income in various jurisdictions, (ii) tax benefits of $4.3 million primarily related to foreign tax credits of $1.8 million, as well as Federal R&D tax credits of $2.5 million and (iii) a tax benefit of $5.0 million primarily related to the release of the valuation allowance on Federal capital loss carryforwards.

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.

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(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.

The income tax provision from continuing operations for the fiscal year ended June 30, 2023 was impacted by the following items:

(i) a tax benefit of $4.3 million due to the mix of income in various jurisdictions, (ii) tax benefits of $14.3 million primarily related to foreign tax credits of $11.6 million, as well as Federal R&D tax credits of $2.7 million, (iii) a tax provision of $11.3 million related to the U.S.

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.

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.

government enacted The One Big Beautiful Bill Act of 2025 (“OBBBA”) 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 OBBBA did not have a material impact on the Company’s financial statements for fiscal year 2026.

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.

This legislation became effective for the Company beginning June 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 year 2026.

On January 5, 2026, the OECD Inclusive Framework members approved changes to the model rules, including the introduction of a “side by side” rule which would exempt U.S.-parented companies from certain aspects of the global minimum tax regime.

The updated model rules will need to be incorporated into local tax legislation to be effective.

We do not expect the new rules to have a material impact on our consolidated financial statements.

Capital Expenditures

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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.

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 A&D.

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.

Due to the nature of long-term agreements in the A&D segment, the timing of orders and delivery dates can vary considerably resulting in significant backlog changes from one period to another.

Backlog orders are as follows (in thousands):

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Backlog under

Engineering Technologies

Specialty Solutions

Aerospace & Defense

Engraving & Hydraulics

Total backlog realizable within one year increased $72.9 million, or 29.7% to $318.5 million at June 30, 2026 from $245.6 million at June 30, 2025.

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Effect of acquisitions

Effect of divestitures

Backlog under 1 year, current period

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Overall Outlook

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.

Looking forward to fiscal year 2027, barring any unforeseen economic, global trade, or tariff related disruptions, we expect mid to high single digit sales growth, driven by high single digit to low double-digit organic growth, partially offset by the impact of the Federal divestiture and unfavorable foreign exchange.

We plan to release over 20 new products which are projected to contribute approximately 300 bps of incremental growth.

Sales from fast growth markets are expected to grow approximately 20% year-on-year to greater than $310 million.

In fiscal year 2027, 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 2027, we expect:

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;

growth of new product sales as recently launched products ramp up and additional launches are introduced;

continued growth in the high margin electrical grid market;

continued strength in defense end markets as new platforms continue to ramp ;

space markets to remain attractive, with modest volume increases expected from ongoing customer development;

scientific cold storage demand to improve with partial recovery in NIH funding;

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.

general industrial end markets to recover.

Electronics Group

2026 compared to 2025

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Operating income margin

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

Net sales in fiscal year 2026 increased by $74.9 million, or 18.7%, when compared to the prior year.

The full year benefit of fiscal year 2025 acquisitions added $44.0 million, or 11.0% to net sales in 2026.

Organic sales increased by $31.1 million, or 7.8%, due to increased sales into fast growth markets and increased new product sales.

The foreign currency impact decreased sales by $0.3 million, or 0.1% as compared to the prior year.

Income from operations in the fiscal year 2026 increased by $33.4 million, or 38.0%, when compared to the prior year.

The operating income increase was the result of higher volume, pricing initiatives and product mix, partially offset by growth investments.

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

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

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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.

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

Income from operations in the fiscal year 2025 increased by $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 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 $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

Aerospace & Defense Group

2026 compared to 2025

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Operating income margin

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

Net sales in fiscal year 2026 increased by $32.4 million, or 31.6%, when compared to the prior year.

The s ales increase was attributable to the full year benefit of the acquisition of McStarlite which added $17.5 million or 17.1% to revenue and an organic sales increase of $14.5 million or 14.1% driven by increased project activity in the defense end markets.

Foreign currency impact increased net sales by $0.4 million or 0.4% as compared to the prior year.

Income from operations in fiscal year 2026 increased by $6.5 million, or 42.3%, when compared to the prior year.

The increase in operating income was a result of higher volume and project mix.

Net sales in fiscal year 2025 increased by $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.

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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.

Scientific Group

2026 compared to 2025

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Operating income margin

Net sales in fiscal year 2026 increased by $3.4 million, or 4.7% when compared to the prior year, due primarily to an $4.8 million or 6.6% full year benefit from the Custom Biogenic Systems acquisition, partially offset by an organic decline of $1.4 million or 2.0% from lower demand at academic and research institutions that were impacted by NIH funding cuts.

Income from operations in fiscal year 2026 increased by $0.6 million, or 3.2%, when compared to the prior year due to contribution from the acquisition partially offset by organic decline.

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 $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.

Engraving & Hydraulics Group

2026 compared to 2025

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Operating income margin

Net sales in fiscal year 2026 increased by $ 3.0 million, or 1.7% , compared to the prio r year.

Organic sales decreased by $1.1 million, or 0.6%, primarily as a result of general market softness.

Foreign exchange impacts increased sales by $4.1 million, or 2.3% as compared to prior year.

Income from operations in fiscal year 2026 increased by $2.2 million, or 8.9%, when compared to the prior year.

The operating income increase was supported by higher sales and the realization of previously announced productivity initiatives and restructuring actions.

Net sales in fiscal year 2025 decreased by $26.7 million or 13.0% 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.

Organic sales decreased by $25.3 million , 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 $11.9 million, or 32.0%, 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

2026 compared to 2025

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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.

Organic sales for the group decreased $10.3 million, or 8.1%, as compared to the prior year period, reflecting organic growth decreases in the Display Merchandising business and the Hydraulics business, due to an ongoing industry-wide chassis shortage.

The divestiture of Procon in the third quarter of fiscal year 2023 negatively impacted the group by $21.3 million, or 16.7%.

Income from operations for fiscal year 2024 decreased $5.7 million, or 22.6%, when compared to the prior year.

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.

Corporate, Restructuring and Other

Net sales in fiscal year 2026 decreased by $12.2 million, or 34.3%, when compared to the prior year quarter primarily due to divestiture timing.

Income from operations in fiscal year 2026 decreased by $3.3 million, or 44.7%, when compared to the prior year quarter, due to divestiture timing and higher tariff costs which have been partly offset by increased pricing.

Net sales in fiscal year 2025 decreased by $4.5 million, or 11.3%, when compared to the prior year period primarily due to general market softness in the Display Merchandising business.

Income from operations in fiscal year 2025 decreased by $2.0 million, or 21.3%, when compared to the prior year period, due to lower volumes.

2026 compared to 2025

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Restructuring costs

Acquisition related costs

Deal related costs

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 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.

Corporate expenses in fiscal year 2026 increased by $8.6 million, or 27.4%, when compared to the prior year, primarily due to increase in variable compensation and employee medical costs.

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

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

Discontinued Operations

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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.

Net cash provided by continuing operating activities for the year ended June 30, 2026 was $89.9 million compared to net cash provided by continuing operating activities of $69.6 million in the prior year.

We generated $120.6 million from income statement activities and used $23.8 million of cash to fund working capital and other balance sheet account increases.

Cash provided by investing activities for the year ended June 30, 2026 totaled $43.1 million.

We used $25.2 million for capital expenditures.

We generated $68.3 million from the sale of business.

Cash used in financing activities for the year ended June 30, 2026 was $56.6 million and included proceeds from borrowings of $75.0 million, payment of debt of $110.0 million, stock repurchases of $4.4 million and cash paid for dividends of $16.2 million.

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 prior year.

We generated $102.0 million from income statement activities and used $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.

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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.

We generated $111.4 million from income statement activities and used $5.1 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, 2024 totaled $61.6 million.

We used $48.8 million for the purchase of acquisitions in the fiscal year and $20.3 million was used for capital expenditures.

We generated $7.8 million in the fiscal year of proceeds from the divestiture of the Procon business.

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.

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

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The fair value of the Company's U.S.

defined benefit pension plan assets was $146.4 million at June 30, 2025, as compared to $142.3 million as of June 30, 2024.

defined benefit pension plan assets was $149.7 million at June 30, 2026, as compared t o $146.4 million as of June 30, 2025.

We participate in two multi-employer pension plans and sponsor six defined benefit plans including two in the U.S.

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We have an insurance program in place to fund supplemental retirement income benefits for three retired executives.

Current executives and new hires are not eligible for this program.

Current executives and new hires are not eligible for this progr am.

At June 30, 2026, the underlying policies had a cash surrender value of $7.0 million and are reported net of loans of $2.7 million for which we have the legal right of offset.

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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.

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.

Under the terms of the Credit Facility, we pay interest on borrowed amounts based on a variable rate of interest and a credit spread based on quarterly reported leverage and 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.

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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.

Adjusted EBIT per the Credit Facility specifically excludes extraordinary and certain other defined items such as cash restructuring and deal related charges up to the lower of $20.0 million or 10% of EBITDA.

The facility allows for unlimited non-cash charges including purchase accounting and goodwill adjustments.

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Total capitalization

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.

Stockholders’ equity increased year over year by $43.5 million, primarily as a result of current year net income of $104.6 million, stock based compensation of $8.8 million and unamortized pension benefit of $7.4 million, offset by an unfavorable foreign exchange translation loss of $43.4 million, an adjustment to noncontrolling interest of $17.4 and dividend payment of $16.1 million.

The Company's net (cash) debt to capital percentage changed to 31.0% as of June 30, 2026 from 38.6% in the prior year.

At June 30, 2026, we expect to pay estimated interest payments of $141 million within the next five years.

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.

This estimate is based upon the loan balance, interest rate, and credit spread as of June 30, 2026 through August 17, 2026 and the adjusted credit spread due to year end leverage ratio change from August 18, 2026.

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.

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

At June 30, 2026, we had $48.3 million of operating lease obligations.

Financial Statements and Supplementary Data, Note 20.

Leases" for additional information regarding 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.

At June 30, 2026, we had a $64.0 million obligation to purchase noncontrolling interest.

The noncontrolling interest was purchased in July 2026.

Additionally, we had $2.2 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.

Other Matters

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

Tariff – Several of our segments may be impacted by ongoing tariff actions.

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.

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In general, the Company recognizes revenue at the point in time control transfers to their 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.

Revenue is recognized over time under certain long-term contracts within the A&D and Engraving & Hydraulics 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 recognized over time, the transfer of control is measured pro rata, based upon current estimates of costs to complete such contracts.

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The Company’s annual test for impairment is performed using a May 31st measurement date.

We have identified six reporting units for impairment testing:

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

We have identified four reporting units for impairment testing:

Electronics, A&D, Scientific, Engraving & 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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In addition, the Company compares the estimated aggregate fair value of its reporting units to its overall market capitalization.

Our annual impairment testing at each reporting unit relied on assumptions surrounding general market conditions, short-term growth rates, a terminal growth rate of 2.5%, and detailed management forecasts of future cash flows prepared by the relevant reporting unit.

Our annual impairment testing at each reporting unit relied on assumptions surrounding general market conditions, short-te rm growth rates, a terminal growth rate of 2.5%, and detailed management forecasts of fu ture cash flows prepared by the relevant reporting unit.

Fair values were determined primarily by discounting estimated future cash flows at a weighted average cost of capital of 9.89%.

During our annual impairment testing, we evaluated the sensitivity of our most critical assumption, the discount rate, and determined that a 100-basis point change in the discount rate selected would not have impacted the test results.

During our a nnual impairment testing, we evaluated the sensitivity of our most critical assumption, the discount rate, and determined that a 100-basis point change in the discount rate selected would not have impacted the test res ults.

Additionally, the Company could reduce the terminal growth rate from its current 2.5% to 1.0% and the fair value of all reporting units would still exceed their carrying value.

1 unchanged sentence

The most significant assumption involved in the Company’s determination of fair value is the cash flow projections of each reporting unit.

As a result of our annual assessment in the fourth quarter of fiscal year 2025, the Company determined that the fair value of the six reporting units substantially exceeded their respective carrying values.

As a result of our annual assessment in the fourth quarter of fiscal year 2026, the Company determined that the fair value of the four reporting units substantially exceeded their respective carrying values.

Therefore, no impairment charges were recorded in connection with our annual assessment during the fourth quarter of fiscal year 2026.

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Financial Statements and Supplementary Data, Note 1.

Summary of Accounting Policies” for information regarding the effect of recently issued accounting pronouncements on our consolidated statements of operations, comprehensive income, stockholders’ equity, cash flows, and notes for the year ended June 30, 2025 .

Summary of Accounting Policies” for information regarding the effect of recently issued accounting pronouncements on our consolidated statements of operations, comprehensive income, redeemable noncontrolling interest and stockholders’ equity, cash flows, and notes for the year ended June 30, 2026 .

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