Matt Roche - IR David Dunbar - Chairman, President and CEO Tom DeByle - CFO.

Chris Moore - CJS Securities Liam Burke - FBR Capital Chris McGinnis - Sidoti & Company.

Ladies and gentlemen, thank you for standing by and welcome to Standex International’s Q4 Earnings Conference Call. [Operator Instructions] Thank you. I’ll now turn the conference over to Matt Roche. Please go ahead..

Thank you, Crystal. 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 statement on slide two.

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, purchase accounting, acquisition related expenses and one-time items.

We will also refer to 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 fourth quarter news release.

On the call today is Standex’s Chairman, President and Chief Executive Officer, David Dunbar and Chief Financial Officer, Tom DeByle. Please turn to slide three, as I turn the call over to David.

David?.

Thank you, Matt. We ended the year with a very solid fourth quarter. Overall revenues increased 12% to $217.1 million with organic sales up 4.4%. Our bottom line performance outpaced sales growth with operating income up 46.9% and adjusted operating income increasing 16.5%.

GAAP EPS grew 18.1% to a $1.11 per diluted share and adjusted EPS grew 6.9% to $1.40 a share. We had a net debt position of $103 million at the end of Q4, which was $24 million lower than the prior quarter.

During the quarter, we recorded better than anticipated sales and profits from our first full quarter of Standex Electronics Japan and the integration is on track and progressing well. In Engineering Technologies, sales grew 26%, driven by strong sales in aviation, aerospace and defense.

In Food Service, our refrigeration business and cooking, oven and tabletop cooking products, collectively what we refer to today as standard products, delivered lower margins due to higher material costs, a mix shift to more low-margin sales channels, and overall lower overall operating performance.

Finally, demand looks strong across all businesses and our backlog grew 19.8% to a $193.5 million. Without acquisitions, organic backlog growth was 9.1%. I’ll touch more on our plans in Food Service and provide more detail on our achievements in each business when I go through our segment review.

But, first, let’s take a quick look at the high level financial performance for the year and some of our strategic initiatives that are transforming the business in a very positive way. Please turn to slide four.

For the year, sales increased 0.5% to $755.3 million with acquisitions more than offsetting the negative effect of foreign exchange, divestitures and the slight decrease in organic growth. On the bottom line, operating income was lower by 7.6% and adjusted operating income was down 0.6%.

GAAP EPS decreased 10.8% to $3.65 per diluted share and adjusted EPS was down 0.9% to $4.55 a share. The lower net income and EPS was primarily due to lower margins in the Food Service segment as a result of a shift in customer mix for standard products away from sales to major chains and more towards lower margin buying groups.

In all of our business, as we’ve been working to reposition Standex to become an operating company with higher value businesses, certain attractive markets that are differentiated and have good growth prospects. Key to the strategy is in bolt-on acquisitions, and we’ve been very successful in that regard.

Acquisitions made in the past three years delivered nearly $100 million in sales and EBIT over 15%. We’re making the right deals, executing on the integrations well and driving value for shareholders. In addition to value creation through acquisitions, the second key area where we made progress is through our organic growth laneways.

I’m pleased to share that the work we began in 2015 to ramp up our organic growth engine is now delivering significant sales volume. In fiscal 2017, we delivered $26 million in sales from our growth laneways.

In just the second half of the year, the growth we generated from our dedicated laneways in Electronics, Engraving and Engineering Technologies was greater than the declines we experienced in other businesses. The result was organic growth in the second half of 3.7%. So, we also feel very good about the progress of this strategy.

We’re excited about some of our new businesses for growth in 2018 across our businesses. The acquisition of OKI Sensor Device Corporation allows us to better balance our regional sales mix and accelerate our pursuit of sensor opportunities in Asia.

During the year, Engineering Technologies completed start-up of our new facility in Wisconsin, to support the ramp up of A320 lipskin awards. Engraving has expanded its non-chemical etching laneway, which should accelerate growth in the future. Although Hydraulics markets were soft in FY17, we look forward to growth in this division in 2018.

Within Food Service, our differentiated products performed well during the year but our standard products faced a challenging year. With restructuring in our standard product business along with growth laneways and specialty businesses, the Food Service Equipment Group should show improvement in FY18.

To sum up, we made significant progress with these key initiatives that are embedded in our long-term growth strategy, and they have all contributed to a strong fourth quarter to end the year. With that, Tom will review our fourth quarter results.

Tom?.

Good morning. Slide five shows our historical trend of adjusted earnings per share and sales on a GAAP basis as well as on an adjusted basis. Earnings per share were $4.55 for the fiscal year on an adjusted basis versus $4.59 in the prior year, which is a 0.9% decrease.

Sales were $755.3 million in the current year versus $734.1 million on an adjusted basis in the prior year. The bottom chart shows quarterly sales and EPS. As you can see, momentum built in both, sales and EPS in the second half of fiscal 2017 as compared to the prior year. Please turn to slide six which details our revenue changes by segment.

Overall, organic growth was 4.4%, the acquisition of Horizon Scientific and Standex Electronics Japan contributed 10.7% to our sales growth, while the divestiture of Roll, Plate and Machinery, and foreign exchange had a negative impact of 2.2% and 0.9% respectively.

During the quarter, Engraving, Engineering Technologies and Electronics reported positive sales -- organic sales growth. Please turn to slide seven, which summarizes our fourth quarter results on a GAAP and adjusted basis. Sales growth was 12% on a GAAP and 14.5% on an adjusted basis.

Operating income was up 220 basis points and 20 basis points on a GAAP and non-GAAP basis, respectively. Earnings per share was up 18.1% on a GAAP basis and 6.9% on a non-GAAP basis. Please turn to slide eight, which is a bridge that illustrates the impact of special items on net income from continuing operations.

Tax-affected special items including restructuring charges of $2 million, purchase accounting expenses of $1.5 million, and acquisition-related costs of $0.7 million. We exclude from net income the $0.5 million gain on the sale of a non-core facility in San Antonio, Texas that was part of the Ultrafryer acquisition.

GAAP net income was up 17.1% and adjusted net income was up 6.4%. Turn to slide nine. Net working capital at the end of fourth quarter of fiscal 2017 was $150 million compared with $132.3 million in the prior year. $12.5 million of the working capital increase was related to the acquisitions of Horizon Scientific and Standex Electronics Japan.

The remainder of the increase is related to higher overall sales values in Engineering Technologies and Electronics. Working capital turns decreased slightly to 5.8 compared with 5.9 a year earlier. Slide 10, illustrates our debt management.

We ended Q4 in a net debt position of approximately $103 million, which is a decline of $24 million since the third quarter. We define net debt as funded debt less cash. Our balance sheet leverage ratio of net debt to capital was 20.2% compared with net debt to capital of 24.7% last quarter.

Slide 11 summarizes our capital spending, depreciation and amortization trends. Our capital spending was 4% of sales during the quarter, was the heaviest in Engraving where we made continued investments in laser technology and our Asian operations.

In 2018, we expect the capital spending will be in the range of $27 million to $29 million, depreciation in the range of $18 million to $19 million and amortization in the range of $8 million to $9 million. Slide 12 details a reconciliation of operating cash to free cash flow.

Conversion of operating cash flow was 173.6% in the quarter and 80.7% for the full year. The lower conversion of free operating cash flow for the year was due to lower operating income, acquisition transaction costs, and higher capital spending. With that, I’ll turn the call back to David..

Thank you, Tom. Please turn to slide 14, and I’ll begin our segment review with the Food Service Equipment Group. Sales increased 7.9% in the quarter driven by the contribution from the Horizon Scientific acquisition. Our Horizon Scientific acquisition had another strong quarter and continued to perform above our expectations.

We’re now in the process of conducting market tests to explore attractive adjacencies and to identify ways to add value and bring innovation to the marketplace. Horizon has adopted Standex’s OpEx initiatives and continues to leverage synergies with Standex’s Nor-Lake scientific brands to drive growth.

We expect this momentum to continue in fiscal 2018. In refrigeration, revenue increased 5.3% due to sales to the drug retail and dollar store segments, and backlog is at an all-time highs spending from international accounts continues to ramp up.

However, the margins on the sales of products and our backlog are lower than they have historically been due to fundamental changes in market dynamics. We’re seeing a higher portion of sales through marketing channels and buying groups along with material cost increases and operational productivity declines.

In cooking, sales were down 10.3%, mainly driven by the proactive rationalization of low-margin products which equated to about $1.2 million of sales losses in the quarter. In addition, we had softer sales to select major dealers and a difficult comparison versus prior year due to the timing of supermarket rollouts.

In addition to the momentum we’re seeing at Horizon, our Specialty Solutions business continues to perform well. Our beverage pump business grew year-over-year for the sixth consecutive quarter.

We remain excited by new pump products that will provide our customers with opportunities to offer innovative carbonated beverages, enhanced CO2 safety and lower maintenance cost. Our display and merchandising business is pursuing a healthy funnel of new business opportunity to deliver growth in FY18.

Looking forward in Food Service, we’re focusing on converting our strong refrigeration backlog. Backlog shippable within one-year is up 32.9% and excluding acquisitions, shippable backlog is up 28.8%.

Looking holistically at the Food Service segment, we have five great businesses that are performing well and are right in line with our focus on customer intimate businesses that provide high value add products and customer solutions.

We’ll continue to apply the growth disciplined processes to the differentiated products to drive top-line growth in these businesses. Our current challenges in the group can be never down to few standard products businesses that compete on cost delivery and quality in the new market environment that I referenced.

As a result, we will be restructuring in these businesses to realign our cost structure. We believe that there is significant upside to these businesses and expect to drive margin improvement as a result of our actions. Please turn to slide 15.

Our bottom-line goal for the Food Service segment has been to achieve margins of 15% and we remain committed to that objective. We’ve held that as an objective to achieve between 2018 to 2020; we now expect that milestone in 2020. At the bottom of this slide, you’ll see a bridge of how we expect to get to 15%.

The setbacks of 2017 have required changes in our path to 15%. In short, we now plan to restructure the cost profile within our standard products businesses to achieve our OpEx targets while growing our differentiated product businesses and expanding margins there.

In the upper left, you can see that 42% of sales come from differentiated brands with EBIT above 15%. These niche businesses are engineered, custom solutions to meet specific customer needs. They are focused on growth, applying our growth discipline process to identify attractive niches, conducting market tests, and rolling out growth laneways.

OpEx and leverage will further increase the margin rates. The margin waterfall shows their expected contributions. 58% of sales come from businesses with EBIT below 10%. These are standard products that compete in operational excellence including delivery and cost.

In recent years, changes in marketplace have seen a significant shift in the mix of sales to lower margin channels. In addition to the focus on OpEx process improvements in these businesses, we now also plan to restructure them to better position them to win in their markets.

Finally, the Group President of Food Service, Anne De Greef-Safft will be the parting Standex at the end of September. Anne has been tireless in driving operational excellence and channel development within the Food Service segment and has been instrumental in driving our revised strategy.

With her departure, we will also realign the businesses to report directly into the CEO and streamline the organization. The markets for Standex products have changed and as a result, the performance has lagged expectations.

After carefully analyzing the drivers for market changes, we’re shifting our strategy in order to achieve our objective of delivering 15% EBIT in the Food Service business by 2020. Turning to slide 16, Engraving. Looking at the top line, adjusted sales including Roll, Plate and Machinery were up 9.1% organically.

Asia Pacific region was up over 20% as OEMs ramped up new model introduction. North America and Europe grew over 10% as new program launches fueled the growth. Innovent sales were lower by $1.7 million due to a large program rollout with a key customer in Q4 2016 that didn’t repeat this year.

On the bottom line, we made investments in growth laneways in laser, nickel shell and tool finishing, which were not fully utilized in the quarter. So, as expected, margins were down. That said, our Engraving group has a solid business with strong growth prospects, and we are making good progress with our investments.

In FY18, we will focus on the integration of the just announced acquisition of Piazza Rosa, which I’ll discus in a moment. FY18 is expected to be a historic year for new model launches in the auto industry and will drive growth for our Engraving business.

Finally, we expect to see growth from the investments we have made in our new offerings nickel shell, laser and architecture. Please turn to slide 17. We recently announced the acquisition of Italy-based Piazza Rosa Group, a leading provider of mold and tool treatment and finishing services for the automotive and consumer products markets.

Piazza Rosa’s market-leading capabilities include polishing, laser welding, laser hardening, laser cladding and repair and maintenance services. This acquisition significantly expands the served market available to our Engraving business. Every tool requires various finishing operations before it goes into production.

Texturizing which is our current core business is only one of these finishing operations. Our GDP+ process identified tool finishing as a growth opportunity. We conducted market tests in fiscal 2016, which led to the creation of the growth laneway in FY17. Our investments to fuel growth in tool finishing have begun to pay off.

In two years, our tool finishing services have grown to nearly $3 million, giving us confidence that it is an attractive market adjacency. Piazza Rosa accelerates our growth plan by bringing a full suite of developed offerings and a proven capability to train polishing technicians in the Romanian polishing center of excellence.

Our combined offerings cover 85% of the market’s needs. We will expand the combined offerings through our global network of 43 locations including four sites from the Piazza Rosa acquisition. Please turn to slide 18, our Engineering Technologies group.

We saw good growth across most Engineering Technologies as the markets in the fourth quarter including the continued ramp up of long-term aviation deliveries in our new state of the art facility. Overall, sales increased 26%.

Sales in the space market increased by $3.3 million from the prior year quarter due to an increase in dome sales, and defense increased $1.7 million of higher navy sales. In addition, we obtained approval from a key customer to begin shipping aviation components in the UK.

During the quarter, we joined the Advanced Forming Research Center in Glasgow, Scotland, enhancing our position as a thought leader metal forming and potentially helping future growth avenues. Going forward, we are focused on completing key space development programs for repeatable production.

We also continue to ramp up to deliver long-term aviation programs for next generation aircraft and completing the Ohio facility consolidation and manufacturing layout redesign to improve efficiencies. Please turn to slide 19, Electronics. Sales increased by 41% powered by organic growth and by our Japanese acquisition, which is performing very well.

European sales increased by double-digits, as a result of demand from military, aerospace, appliance, industrials and auto markets. Sensor and reed relay sales both grew high single digits in the quarter. Organic growth of 4.1% was driven in part by sales from growth laneways.

We are seeing great momentum in integration of our new Standex Electronics Japan acquisition. On the sales front, we quickly identified an attractive funnel of new business opportunities for sensors in Asia.

Also during the quarter, we held our first technical counsel to get our teams together from Germany to UK and Japan, regions where we make reed switches, to discuss best practices across all of our plants. Looking forward, we’re seeking to continue the momentum in the custom sensor and reed relay markets.

In addition, we’re focused on capitalizing on magnetic new business opportunities where activity has been robust. We’re also implementing a sales structure to secure Asia Pacific sensor opportunities and leverage the success of our growth laneways and strong momentum in the base business. Please turn to slide 20, Hydraulics.

The 10.7% sales decrease in Hydraulics is primarily the result of softness in the North American dump market. While lower revenues had a deleveraging effect on operating income, we maintained a strong EBIT margin of 17.5% as a result of our operational excellence initiatives.

We believe our markets are fundamentally sound and we’re optimistic for a good fiscal 2018 in Hydraulics as a result of our strong project pipeline. Furthermore, plans for infrastructure investments become clear and we anticipate additional demand due to our improved medical environment.

Before we go to questions, let me leave you with just a few key thoughts. As we continue to transform Standex to be an operating company, profitable niche businesses, we are executing well on Standex value creation system.

Recent acquisitions of Standex Electronics Japan and Horizon Scientific are key components to future growth and profitability for Standex and are performing in line with expectations. Going into the first quarter, our backlog is strong and Electronics, Engraving, Engineering Technologies and Hydraulics are all on growth path.

Food Service had a challenging year in 2017 as the markets have changed and we are adjusting to those market conditions. Our standard products need further organizational realignment and restructuring to improve the profitability and that of the overall growth. Specialty solutions brands of Procon and Federal have good momentum going into FY18.

Scientific Refrigeration will continue to bring both Horizon Scientific and Nor-Lake scientific together for sales and manufacturing in synergies in FY18. Cooking brands and BKI and Ultrafryer continue to make inroads in major chains both on the retail and restaurant industry in FY18.

And finally, as we look into the future, our balance sheet is well-positioned to fund CapEx, organic growth and acquisition, as we continue to deploy the value creation system. With that, we will go to your questions.

Operator?.

[Operator Instructions] Your first question comes from the line of Chris Moore with CJS Securities. .

Maybe can we just start on the Food Services side? Can we maybe step back a little bit and just talk in a little bit more detail the specifics of the kind of the scope of the restructuring and timeframe and things like that?.

First of all, the restructuring will be focused on the standard products of Food Service, which is the refrigeration business and a few product lines within cooking. Basically there are two different approaches. Let’s talk about cooking first.

You’ll recall back in 2013, we began a product line move -- plant move from Cheyenne, Wyoming to Nogales for those standards products that was all part of driving the competitiveness of those product lines which competed in competitive segments with standard products.

We brought in some outside help to take a look at our plant in Nogales where we’re improving a small change in the layout and restructuring the way we’re organizing and running that plant. We think we have good line of sight to improvement and ought to see results through the end of the year.

And total investment is in that $1 million to $2 million of restructuring. On the refrigeration side, we’re in the process of working through details. We have two plants, each manufacture a variety of products. And over the years -- this is interesting, Chris. If you go back to a business in FY 2013, we have scientific embedded the Nor-Lake business.

With our Horizon Scientific acquisition, we pulled out all the scientific business and that really gave us a greater clarity to what’s going on in the refrigeration business. In between FY 2013 and FY 2017, total refrigeration sales went from if I recall it $193 million to $170 million something like that.

But the sales from buying groups actually increased $20 million in that time, which resulted in the mix shift in the margins of the business - like treating downdraft of about 400 basis points of margin.

So, we’ve talked a lot in the last year about the national accounts change, which have been a significant effect, but stripping out the scientific business really helped us see that -- there is a macro change going on in the market here. So, we’re aligning our business to that market reality.

So looking at the refrigeration plants, we have new management team that’s been in place since January. I think they’ve done some great [Indiscernible] analysis to identify product lines and customers to focus on. We’re in final stages of evaluating our restructuring options.

We will come back in October with more detail on it, but just to can give you an idea, we’re thinking somewhere along the lines of -- something up to $5 million restructuring cost at top end. Not all of that will be in this fiscal year and it will be a better than two year payback.

And this is all to position our business to compete in its OpEx markets, cost, delivery and quality. Hope that answers your question..

Yeah. Absolutely. Thank you. .

[Indiscernible] longer answers than Tom..

No, that was good. If I’m looking at the break out, 42% from differentiated, 58% from standard, and then kind of comparing that -- I know that refrigeration services has a very big backlog coming out of Q4.

Is the mix within the backlog kind of consistent with that 42%, 58% or just trying to understand if it’s kind of higher or lower margin that’s in the backlog?.

No, the backlog is up in all the differentiated businesses as well. And Tom is pulling out the numbers out the numbers here but I’d say it is….

It’s all up; it’s up in all businesses and food services..

Yeah, I think in the script, I called out refrigeration being up; overall that 20% number is….

Right..

The entire business….

Specialty is up dramatically, all of them are up above that..

And last question is on the Standex Electronics Japan. It sounds like you’re -- when you did the OKI acquisition, one of the things that you pointed to was the ability to really move up the value chain on the reed switches.

That process has started already at OKI?.

Yes. I can’t recall if we mentioned this in the last call. But our original expectation is that it will take us about a year to organize and get after the sensor opportunities in Asia. We’ve found out very early on when we met with this team, the OKI team, now it’s Standex Japan team, they had already been thinking about this.

They have a list of 20 solid opportunities that we have to go after. They have some sales people we could immediately redeploy to go after that; sales people that have been supporting Europe and North America. But we already have organizations in Europe and North America, so we’ve deployed them and they’re pursuing that business right now.

So, we think we’re ahead of our expectation on that pursuit..

Your next question comes from the line of Liam Burke with FBR Capital. .

David, could you give us a little more color on the ramping of the aviation contracts? You expanded the plant in anticipation of the contracts that you had in hand.

How do you see it shaking out in terms of full ramp in 2018?.

Yes. When we announced those awards, if you go back a couple of years, Liam, we announced that according to our customer’s plans, which was UTC for the geared turbofan and then Airbus with the CFM engines from the A320 that we’d achieve full volume by the end of FY2017. Both of those ramps are being pushed out to 2018.

So, I would say unless there is another change from our customer, we ought to be at full volume by middle of 2018, which is going to be about mid-teens millions of dollars annually..

Okay, great. Thank you. And on the capacity on electronics, you’ve seen a pretty hefty step up in activity.

Are you sized okay for the current demand levels?.

One of the first things we did is we approved some capital for Japan to add some capacity. So, we’ve got the factory space, we are expanding our machinery to produce reed switches and relays because we’re optimistic about the growth prospects. And the market is very, very active right now..

Okay. And Tom, very quickly.

On the tax rate for 2018, is this similar to 2017?.

Yes, I would say 29%-ish, 28, 29..

Thank you very much..

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

I guess just to touch a little bit on Food Service build. When you think about that 15% margin, can you maybe just talk about I guess how the portfolio will change within that? And then also, would you expect more dollars or less dollars in terms of just kind of how you’re going to situate the portfolio? Profit dollars, sorry..

Yes. So, the first look would be, we are seeing and we expect to continue to see healthy growth in differentiated businesses, both in sales and expansion of margin. And so they will become -- that 42% will grow and their contribution to margin will grow faster than that. On the cooking side, we expect growth.

The refrigeration business, I’d say, we may come back to you in October once when finalize our plans there, because we’re going through every customer, every product line and looking at the relative health and competitiveness. And we’ve said many times ago before, business should get smaller before it gets larger to get down to that 15% EBIT number.

I can’t give you an exact decline. But, if it would -- if we were to trend something from the refrigeration sales expectations; that would be the likely area we see some intentional decline..

Okay. And if I could, just with the refrigeration, I know it was up in the quarter itself.

But, can you maybe just talk about the backlog that you registered last quarter and now? Were you expecting internally to seem more dollars coming from that or can you just maybe walk us through that a little bit?.

The backlog grew -- let me primarily answer the direct question. The backlog grew faster than we’d anticipated. So, we had good growth in orders, good growth in backlog. In terms of our conversion, we would have expected to convert a little bit more of that, but it’s -- on the order of $0.5 million to $1 million, so not a significant amount..

Okay..

But, it ramped up to the quarter. So, the factories are fall, good backlog, and the momentum is continuing..

So, no operational in terms of -- I think last quarter, you had some operating issues around the refrigeration and the form within it, but….

Yes. Well, the operational issues in refrigeration continued through into the quarter, into Q4, a little of Q4. So, we were -- at our last earnings release, I think we’ve communicated that we thought it would be full production by the end of April; there was some mislead delay..

Okay.

And then lastly, can you just maybe just touch on the auto markets in Engraving and just kind of what you see for the year? It sounds like very strong growth going, but then also with the Piazza acquisition, how that helps you maybe term of business and your direction maybe?.

Yeah, great question. So, first of all, I think -- you know what drives sales of Engraving is new model introductions, it’s not driven by SAAR. The industry data says that it will be -- believe it or not, a 30% increase in the number of new models introduced in our fiscal year 2018 compared to FY2017.

So, we’re expecting really nice growth this year in Engraving. And in fact, part of the decline in margins you saw in Q4 was as the backlog ramped up and they begin order materials and scheduling and preparing for this bunk, we incurred some of that cost last quarter. So, we’re seeing that increase through our customers.

Now, Piazza Rosa, what’s exciting to us is so many meetings I had with investors and shareholders that Engraving that Mold-Tech business is so nice, how can you grow, you got this great niche in on texturizing.

And one thing we’ve learned is that for every dollar they spend on texturizing the molds, there is $3 spent on other related services to finish the mold. Some of these are actually high-tech services.

So, 2.5 years ago, we started an experiment to two countries in Europe, we invested in some tool polishing and finishing services and in two years we grew that to $3 million. It delivers good margins in line with our texturizing business. And we knew of this company in Northern Italy, Piazza Rosa.

So, once we proved that we can make money at this, it was a good market expansion, we began discussions with the owners of Piazza Rosa, and we’ve found it very good cultural fit. Their vision was to expand it globally.

What we can do is, we can plug their services, their expertise into our 40 sites around world, and this would rapidly accelerate our tool finishing growth. So, instead of serving a $300 million global market, we’re serving a $900 million market through Engraving now..

[Operator Instructions] At this time, there are no further questions. I will now turn the call back to management..

All right. Let me thank everybody for dialing in. Thank you for your interest in Standex. And we will work hard in the quarter and look forward to coming back to you with our Q1 results. Thank you..

This concludes today’s conference call. You may now disconnect..