David Calusdian - IR David Dunbar - President and CEO Tom DeByle - VP and CFO.

Schon Williams - BB&T Capital Markets Liam Burke - Wunderlich Securities Chris McGinnis - Sidoti & Company Jamie Wilen - Wilen Management.

Ladies and gentlemen thank you for standing-by and welcome to the Standex International Second Quarter Fiscal Year 2015 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question and answer session. (Operator Instructions).

It is now pleasure to turn the call over to David Calusdian to begin. Please go ahead sir. .

Thank you Maria. Please note Please note that the presentation accompanying management’s remarks can be found on Standex’s Investor Relations website, www.standex.com. Please see Standex’s Safe Harbor passage on Slide 2.

Matters that Standex management will discuss on today’s conference call include predictions, estimates, expectations and other forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially.

You should refer to Standex’s recent SEC filings and public announcements for a detailed list of risk factors.

In addition, I would like to remind you that today’s discussion will include references to EBITDA, which is earnings before interest, taxes, depreciation and amortization; adjusted EBITDA, which is EBITDA excluding restructuring expenses and onetime items; non-GAAP net income; non-GAAP income from operations; non-GAAP net income from continuing operations; and free operating cash flow.

These non-GAAP financial measures are intended to serve as a complement to results provided in accordance with accounting principles generally accepted in the United States. Standex believes that such information provides an additional measurement and consistent historical comparison of the Company’s performance.

A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available in Standex's second quarter news release. On the call today is Standex President and Chief Executive Officer, David Dunbar; and Chief Financial Officer, Tom DeByle. Please turn to Slide 3, as I turn the call over to David. .

Thank you David. Good morning from a snow covered New Hampshire. I'd like to welcome those listening and interested to today’s earnings call. We have reported another strong quarter in Q2. Total sales grew 13.7% from Q2 last year. Netting out acquisitions, we grew 6.5% organically. Foreign exchange had a negative effect of 1.9%.

Organic growth initiatives in all of our businesses contributed to this top-line result. Growth was much robust in the North American market, particularly in fruit service, space and construction. At the same time we saw a slowdown in energy related markets as you can well imagine.

And the rollout of new automobile models which have been growing leveled off. On the bottom-line second quarter non-GAAP operating income was up 12.3% and non-GAAP EPS increased 11.5%. Free operating cash flow for the quarter increased 8%.

During today’s call I will be reviewing key drivers of our each our business segments and our primary focus areas for each going forward. Among the significant highlights this quarter, we saw strong performances from both of our recent acquisitions, Ultrafryer in food service and Enginetics in engineering technologies.

Both are meeting our expectations for earnings accretion. Another priority is the progress that we continue to make in improving performance of our Cooking Solutions plant in Nogales, Mexico. Before I go into more details on those highlights and other segment developments, I'll turn the call over to Tom to discuss our results for the second quarter.

Tom?.

Thank you David and good morning everyone. Please turn to Slide 4. Four of the five segments reported organic growth for the quarter and all five reported growth year-to-date. On the chart you can see the contributions from acquisition and the currency effect for each segment.

Overall organic growth was 9.1% with acquisitions contributing 6.5% versus Q2 last year, due to the Enginetics acquisition in engineering technologies and Ultrafryer in food service. Currency had a negative effect of 1.9%, which results in an overall growth of 13.7% for the quarter. Year-to-date organic growth was 9.4%.

Acquisitions contributed 4.9%, and currency had a negative effect of 0.8% for a total growth for the six month period of 13.5%. Please turn to Slide 5. On a trailing 12 month basis adjusted earnings per share was $4.39 through December 31, 2014, versus $3.78 in the 12 months ended December 31, 2013, a 16.1% increase.

Sales were $716 million on a trailing 12 month basis as of December 31, 2014 versus $681 million in the prior year. Please turn to Slide 6, which summarizes our second quarter results. Net sales for the second quarter increased 13.7% to $189.3 million from $166.5 million in the second quarter of fiscal 2014.

Excluding special items operating income grew 12.3% to $17.9 million from $15.9 million a year ago. Adjusted EBITDA grew 13.6% to $22.3 million or 11.8% of sales compared with 19.7 million, also 11.8% of sales in Q2 of last year.

Please turn to Slide 7 which is our quarterly bridge that illustrates the impact of special items and net income from continuing operations.

For the second quarter of fiscal 2015 these items included tax affected $808,000 of restructuring charges, primarily related to the move from a direct channel sales structure to a distribution model in the UK Food Service business and expenses related to the move of our Electronics Mexico business into new facility; $672,000 of purchase accounting related to the step up of inventory from recent acquisitions and $239,000 in discrete tax benefits.

In a comparable period of fiscal 2014 there were $462,000 of tax effective restructuring charges, $1.5 million in non-recurring management transition expenses and a tax effective gain related to insurance proceeds of $1.4 million.

Turning to Slide 8, net working capital at the end of the second quarter of 2015 was $147.2 million compared with $127.4 million a year earlier. The increase in working capital related to recent acquisitions, sales volume increase and a temporary inventory build to support consolidation efforts.

Working capital turns were 5.1 compared with 5.2 a year earlier. Slide 9 illustrates our debt management. We ended Q2 in a net debt position of approximately 43.3 million. This compares with a net cash position of $2 million a year earlier. We define net debt as funded debt less cash.

The increase in net debt was primarily related to the acquisitions of Ultrafryer and Enginetics during the calendar year. Our balance sheet leverage ratio of net debt to capital was 11.9% compared to the net cash to capital of 0.6% a year ago.

During the quarter we amended and extended our five year credit facility to increase our revolving amount from $225 million to $400 million. The terms of this agreement provide us with increased flexibility to fund future growth, acquisitions and other strategic initiatives.

In addition to increased liquidity we locked in current credit borrowings [indiscernible] in a favorable credit market. Slide 10 summarizes our capital spending, depreciation and amortization trends. Capital spending for the quarter was $6.7 million.

Spending is in line with our fiscal 2015 estimate and is supported both by growth initiatives and current factory automation audit. We expect that our capital spend will be in the range of $25 million to $27 million through our fiscal 2015 including recent acquisitions. Slide 11 details our strong free cash flow performance for the second quarter.

Net cash provided by operating activities was $22.8 million. On a year-to-date basis free cash flow was impacted by increases to working capital associated with higher organic sales volume, inventory build and factory consolidation, as well as increased capital spend to support sales growth program and factory automation.

With that I’ll turn the call back to David..

Thank you, Tom. Please turn to Slide 13 and I'll begin our segment overview with the Food Service Equipment Group. Sales in Food Service increased 12.8% from Q2 last year, while adjusted operating income was down 2.5%, excluding purchase accounting from the Ultrafryer acquisition.

In refrigeration growth in general dealer sales, drug retail and dollar stores drove strong year-over-year increase. In cooking solutions we reported double digit top line growth, even when you exclude the acquisition of Ultrafryer. Our Ultrafryer integration with sales performance are on plan.

Cooking solutions’ revenue was partially driven by catch up sales from the transfer of our Cheyenne facility to Nogales that we completed last quarter. Our specialty solutions business also had a good quarter with high single digit sales growth driven by delicatessen and display case sales to convenience stores and the QSR chain.

Overall orders were also strong as a result of export sales. On the bottom line we reported good profitability and improved efficiency of refrigeration.

Profitability in refrigeration was more than offset by expenses related to earlier inefficiencies, resulting from the transfer of our Cheyenne facility to our Cooking Solutions plant in Nogales, Mexico. And we are now pleased and we are excited to welcome Anne De Greef-Safft as our new President of Food Service.

Anne joins us from Danaher, and has significant experience driving innovation, integrating acquisitions, developing talent and driving efficiency. We look forward to Anne’s contributions in moving our food service segment forward.

Our operational priority has been to improve plant operations in Nogales to enhance efficiencies and get cost and margins back where they need to be. We pulled together a team consisting of the best people in Standex, lien experts, plant managers, engineers, IT and finance, to improve plant performance.

As a result plant production improved throughout the quarter and the plant exceeded its December target. Our attention is now moving to reduce higher costs related to earlier plant performance. These include operating inefficiencies, straight costs from expedited and partial shipments and price concessions.

We expect that these costs will decline throughout the remainder of the fiscal year, and we continue to expect the Cheyenne consolidation into Nogales to result in $4 million in annual cost savings.

In order to further improve margins on that side of the business, during the quarter we restructured our UK organization, where volumes did not justify a direct sales model. We have therefore moved the business to a distribution model to reduce channel costs and enhance profitability. We're also focused on new product rollouts.

Our combi oven [ph], which has now completed two years in the market is performing quite well and we're working on continued market penetration. Our new speed oven is in test kitchens and is ready for production. New chains are evaluating speed oven and interest continues to grow.

We will show these products and the rest of our line up at this month's NAMM [ph] Show in Anaheim California. As we've discussed previously, we see opportunity to better leverage cross selling efforts between our various Food Service businesses.

For example we recently leveraged cross selling between our refrigeration and specialty solutions businesses to create opportunity for the large national drug chain overlap. Turning to Slide 14.

Engraving Group sales declined 6.2% year-over-year, including a 4.6% negative foreign exchange effect, as global auto rollouts plateaued the excellent growth we saw last year. Our Mold-Tech business grew at a mid-double-digit rate in China, where we opened our fifth manufacturing facility during the first quarter of the fiscal year.

We remain very optimistic about our long-term potential in that region. We also grew sales in Europe despite the negative currency effect. Nearly offsetting the lower level of auto rollout were sales generated by our Design Hub in Manchester, England and the new hub in Detroit that we opened during the quarter to service North American OEMs.

These hubs, which provide auto OEM design teams with rapid prototyping of their future automotive interior textures are proving to be real differentiated concept in our business. In our roll, plate and machinery business, market conditions were weak in both North America and Brazil.

However our North American backlog grew significantly during the quarter as a result of improvement in the construction and consumer market. So we expect to manage a high order backlog and delivery schedule in that business during the second half of the year. We also recorded sales from large projects [indiscernible] tissue and towel maker.

Even though sales were down year-over-year with significant currency headwinds, profitability in the segment was up 2.2% and we did a good job driving margins and we recorded a greater amount of higher margin sales in China.

Looking forward we will continue to focus on driving new sales growth through nickel shell and laser engraving in Detroit and the design hub in the UK. We also will leverage continued momentum in China and capitalize our new manufacturing site in Asia and Eastern Europe. Please turn to Slide 15, our Engineering Technologies Group.

Sales for the quarter were up 53.6% year-over-year, or up 14.2% when you exclude the acquisition of Enginetics. Strong developmental and production sales to space customers and the launch vehicle in defense segments were primarily responsible for the double-digit organic increase.

The launch vehicle segment is particularly active with a number of development programs. In addition, legacy sales in the aviation segment were up by double-digit and development programs moved into the production phase.

In aviation we recently received a new long-term contract to produce single-piece lipskins for the nacelles on one of the largest selling commercial aircraft in the world. The contract represents a $4.5 million run rate at full production.

In addition, we continue to be very excited by our Enginetics acquisition, which remains on track in terms of both integrations and performance. Sales in the oil and gas market were down significantly and the medical market was also soft.

Profitability in Engineering Technologies was up 62.9% excluding purchase accounting for the Enginetics acquisition. Profitability growth was due to volume leverage and margin improvement initiatives across the organization, partially offset by a lower mix of high margin oil and gas in medical segment sales.

At the same time we are ramping up capacity to support growth opportunities in aviation as well as the new vertical machining center in Massachusetts.

We are contracted to begin production on our Airbus award at the end of calendar 2015 and we are exploring various options to further expand machine capacity in either existing facilities or in a Greenfield site. Looking forward we are concerned about the slowdown in oil and gas.

We expect the future market will be down for the foreseeable future and we will take actions to warrant [ph] costs into demand. Please turn to Slide 16. Electronics sales increased 5.1% year-over-year, while operating income increased 7.9%. Growth in Electronics was driven by the transportation sector in North America.

Sale of reed based sensors were very strong during the quarter. Sensor sales represented 43% of our total Electronics segment revenues. We also saw broad market growth during the quarter in auto, appliance, metering, military and aerospace, medical, security and HVAC.

Automotive programs and solar energy market demand in Europe drove single digit growth in local currency, but foreign exchange resulted in a year-over-year decline in that geography. In addition to leveraging the top line, plant consolidation in China, including moving some volume to Mexico contributed to the year-over-year operating income growth.

Looking forward in Electronics, we plan to continue to capitalize on the solid new business development process this business having placed in the [indiscernible] chain and provide complete value added solutions. Our new product focus is on planar transformers, stainless steel sensors, relays and alternative technologies.

We are very pleased with the recent introduction of a new 10 millimeter reed switch. Our Hydraulics Group, as you can see on Slide 17 continues to perform very well, turning in a 39.3% increase in sales and 37.1% growth in profitability.

Growth across all of our end markets was due to the recovery in housing, aging equipment replacements and the terrible economy. We saw double digit growth in the dump trucks, dump trailer, refuse and aftermarket segments during the quarter.

We’ve been highly successful in executing on our strategy to win new applications one after another through customized engineering led sales. For example our recent market share gain in the refuse space was a result of [indiscernible] for new OEM applications and garbage trucks continue to roll off and come back to the platform.

The factory expansion to add capacity at our Tianjin, China plant is now complete, which strengthens our global competitive advantage by enabling us to bundle telescopic cylinders from North America with rod cylinders from China. We continue to ship and book orders at record levels at the China plant.

Looking ahead, we're focused on working to expand our addressable market by pursuing new opportunities and completing the installation and operation of new equipment. In summary, we performed well for the first half of 2015. Organic growth initiatives across all segments contributed to sales and operating income and our backlog is solid.

Our markets for the most part are firm. Oil and gas is the most obvious exception to the positive end market dynamics we're seeing. We had a 5% exposure to this market across all of our businesses.

We do expect a growth in auto sales and food service expenditures as a result of oil and gas prices could offset some of the negative impact we expect to see from our oil and gas exposure. Additional headwinds could come from weakening in the eurozone in China as well as the strong dollar. We estimate that the effect of the stronger U.S.

dollar will adversely impact year-over-year net sales by approximately 2% using current foreign exchange rates. The financial performance of our recent acquisitions is demonstrating the success of our acquisition strategy and we have a healthy active pipeline of additional prospect.

We will continue to execute on our planned investments to support increased demand, and we have a strong balance sheet that allows us to pursue both organic and acquisition growth.

And with that, we’ll be pleased to take your questions, Operator?.

(Operator Instructions) Our first question comes from the line of Schon Williams from BB&T Capital Markets..

Maybe if we could just start with food equipment margins. Could you talk about -- there was also in the quarter at that time -- what you were expecting given some of the headwinds in Nogales and then maybe if you could talk about expectations in the back half of the fiscal year.

Are you guys still targeting kind of low double digits for operating margins in that unit going forward?.

Let’s start with that second part of your question Schon. We still expect to exit the year at -- you said low double digit margin. I think we said 12% operating income for the Food Service Group. So last quarter I did expect more of the linear path to that 12%. But let me explain what's going on there. I referred to it in the comments.

Last quarter we deployed a tiger team of experts to improve plant performance in Nogales, and they did. The plant performance in Nogales is improving. We have a new general manager there. They're driving [indiscernible], improvements cell by cell. They're getting their daily production up.

They were going to right size their headcount, reduce over time and they’re holding those [indiscernible].

We saw increased costs in -- primarily in two areas freight and well, not cost but margin compression in pricing, and those things relate to plant performance and sort of a ripple effect as a result of the plant performance and we're still working down capacity backlog.

It is higher than -- higher than average level of expediting rates and partial shipments that are occurring to meet customer demand.

And you could also imagine that in compensation for us on the plant performance issues, our sales team have negotiated various price compressions with the different parties, whether end-users or dealers, and we expect both of these things, the price impact in freight to wind down as the improvements in the plant ripple through the system. .

Alright, that’s helpful. And maybe if you could turn to Engraving. Obviously some of the new platform rollout -- that seems to be stabilizing at this point. I'm just wondering -- as you look out over the next 12 to 18 months what do we need to do in order to get that segment growing again.

Is it the new design hubs that you talked about? Is it roll and plate business starting to perk back up? What it is going to take if we assume that the new platform rollout is going to be steady to maybe even a bit soft over the next couple of quarters.

What it's going to take to get that business growing again?.

So there's few elements there. First, if you look at the history of the business over several -- if you go back several years, you will see there is a certain lumpiness in that business based on the timing of projects in rollout. In the last call -- in the previous call, we talked about growth prospects.

We've had several quarters of double-digit growth in that business as we work on riding a golden era of new model rollouts and frankly increased market share, because we've got really competitive advantage there. And we communicated that -- we expected the growth of this business to be more aligned with its historic growth, which is 5% to 7%.

I think the biggest growth potential in the business is in line with that, 5% to 7%. And there's few elements to that. In compensation for plateauing of all the remodel rollouts, the twin [ph] packages in models now are increasing.

So if you order a -- if you're getting a car, you can then choose what kind of pattern you want in the dashboard or in the interior panel on more and more vehicles. We expect that to provide growth opportunity. We have opened new sites in the last six months. In fact we just had a grand opening for a new site in Malaysia.

The Malaysia site will focused on electronics and consumer products. And it is a good region surrounded by larger [ph] manufacturers and will drive some growth. China grew in the 16% last quarter in this business. We have a site -- potentially another opening in China to grow there.

And finally vertical [ph] machining had a [ph] backlog in the last quarter. We will see that get delayed and we expect those rollouts in the next couple of quarters to bring those results. So I hope that gives you some of the pieces and the overall expectation, that 5% to 7% growth. .

Just to maybe price a little bit more, Again the timeframe that we should be thinking about to get back to that 5% to 7%, we're talking about quarters, not years.

Is that reasonable?.

Recognize the currency impact in the first half. I guess when we back three - six months, I was really talking about just organic growth impact, in the first half -- regarding [ph] at 5% growth through the first half. If you look at first half to second half phasing, typically this business --second half is about 5% to 6% higher than the first half.

Our current view is we see that thing kind of split first half to second half. There's a little mix change going on. Now we'd expect that 5% first half growth to continue in the second half..

That’s helpful. And one more if I may, just with the increased flexibility on the balance sheet now with the new facility, could you talk about -- obviously you've done transactions within food equipment, within aerospace.

Can you talk about just what are the areas that you're targeting going forward and then I guess where is the pipeline most robust at this point in terms of opportunities?.

Yes. So last year at our Investor Day and one other earnings calls we motioned, they are a prospect to all of our businesses. And depending on the timing of the deal, we could potentially do deals in any of the segments.

However the areas with the highest number of prospects where we just like the underlying characteristics of the business, the combination of those two characters are electronics and the engineering technologies related business. And I'd say in both of those, the pipeline is healthy.

And if you think of the electronics space globally, as you can imagine there are very large number of businesses that are in a sweet spot of what makes a good Standex acquisition and fall well within our ability to execute, and handicap in kind of that overall electronics technologies, followed by the others with continued good prospects..

Our next question comes from the line of Liam Burke of Wunderlich Securities..

David, Enginetics has become a much bigger part of the engineering technologies. Obviously engineering technologies is one of your growth engines.

Could you give us a little more detail on how that business is rolling in and what the benefits are now that you have it in house?.

Well a couple of things. First of all, it has really improved the mix of the businesses in Engineering Technologies.

Where Aviation last year was 6%, now it’s over 30%, and with the growth prospects -- in the coming years it will be 50% of our business, based on the expansion of the long term agreements we have both in our legacy spin craft business and Engineering Technologies.

And that’s important because as know the Engineering Technologies legacy business has been very lumpy a project. They’re a project related service [indiscernible] be on large commercial programs will be very good. Second the Enginetics, when we acquired we had a certain expectation of revenue and margins and evaluation model.

They are tracking to that model. We are pleased with the progress and we had an expectation that between Enginetics and our spin craft business, it should leverage contacts and open up new opportunities for cross sell and we are starting to see that. There're really a lot other cycles in that sales opportunity but I promise you nonetheless..

Thank you, David. Tom, you are cash flow negative for the first half of the year. You highlighted some of the initiatives that created that negative cash flow, most of them driven by growth initiatives. I'm looking into the second half of the year.

Do you anticipate generating positive free cash flow year?.

Yes we do. Generally our fourth quarter is our best quarter where our working capital is at its lowest point and that contributes to -- I know we’re having a little bit higher capital spending this year but we should have a positive cash flow..

Our next question comes from the line of Chris McGinnis from Sidoti & Company..

Just a quick question. I guess just with your talk about kind of the end market demand, you're worried about kind of a slowdown in possibly Europe and China.

Are you starting to see that or is it more of just being cautious because of kind of the economic?.

We are being cautious but we haven’t seen it. Our Chinese businesses are 15%. Our European business is growing and Engraving, it’s largely due to new growth initiatives through the Standex growth disciplines. The design hubs increased their billings to compensate for other stock lifts and our electronics business remained strong in Europe.

So I would say on that front it’s more a function of -- it's an abundance of caution and keeping alert to a decisive [ph] slowdown in our business..

And then just dig into Nogales a little bit more. How much of the two components you talk about? The freight and the pricing were kind of part of the margin.

How much did that add and in your past that amount -- so I think you said you’ll be at 12% by the end of the year?.

Right for the group as a whole. Yes, freight and price, the year-on-year impact were the two biggest components and together really account for the entirety of the decline..

And are you past that now? Like that’s over with for that?.

As I described, it will take some time to work its way through the system. The plant is still shipping up some pass through backlog rapidly catching up, some of that pass through will need to be expedited. So we'll still see some freight in partial shipments for a time.

And price concessions are something that we'll live through for the next few months because these were negotiated last quarter or quarter before in compensation for its plant performance.

So the first plant improves, then the freight will improve, and then the price will work its way through the system and we expect through the next couple of quarters these will get back to normal levels..

Sure and can I just dig just a little bit more -- just on food service side, the continued strength.

Do you still feel confident entering the back half of the year with where the orders position are?.

Yes, top line continues to explode..

(Operator Instructions) Our next question comes from the line of Jamie Wilen of Wilen Management..

Just wanted to clarify, you're reaching 12% as an operating margin in the Food Service division end of the fiscal year the calendar year?.

End of our fiscal year..

Your fiscal year?.

Yes..

And with that all the cost savings will be fully implemented by then?.

The cost savings previously announced -- $4 million will be in the run rate. Yes. Long term I think -- we’ve told you that there is a few changes in this food service story. In the short term we're position [ph] really $4 million we’ve announced but long term we know where our peers are and there will be continued improvement after that..

What’s your objective long term for the operating margin in Food Service? What can you really get to when you are operating efficiently?.

Well, what I said in the past is and I am talking longer term here, we expect we can continue new opportunities like the other reported publicly reported food service companies..

Okay, and the previous question is -- the organic growth rate in food service, you expect to maintain that base?.

Well, what I said before and fortunately the good news has exceeded my expectations. My promise is that we’ll grow at market and we think this in a 4% to 5% growth market and we have been exceeding that. But I wouldn’t commit to above market growth.

We are still focused on operating improvements that -- I don’t want to drive the business to be too aggressive on the top line side and fortunately they’re exceeding, but that 4% to 5% is the expectation I do see..

And lastly, Engineering Technologies, you are running at capacity in your facilities and you’re going to have to add locations moving forward?.

We would look so much at Standex. There were several components to this. As you know we serve -- two of our products are oil and gas and energy related businesses. They have -- and those machines, those lines, they have excess capacity and probably will for some time. We're going to take some cost out.

We have a rapidly growing aviation component with the Airbus [indiscernible] like year ago and then this new award. I mentioned it today. We will get a press release out as soon as we work this through with the customer.

We will be expanding capacity to support aviation in our related [indiscernible] plan so that’s where the investments are and we’re in the -- with the Massachusetts plant, we’re insourcing the machine and starting that vertical machine center of this quarter..

And that was our final question. I would now like to turn the floor back over to David Dunbar for any closing or additional remarks..

Thank you all for joining us and taking an interest in Standex. We’re pleased with our top line growth and we know what our priorities are and we have our best people working on them. We look forward to following up with you after the next quarter. Thank you..

Thank you. This concludes today’s Standex International’s second quarter fiscal year 2015 earnings conference call. You may now disconnect and have a wonderful day..