Quarterly Report for Quarter Ending December 31, 2025 (Form 10-Q)

Item2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

Statements contained in this periodic report that are not based on historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of forward-looking terminology such as "should," "could," "may," "will," "expect," "believe," "estimate," "anticipate," "intend," "continue," or similar terms or variations of those terms or the negative of those terms. There are many factors that affect the Company's business and the results of its operations and that may cause the actual results of operations in future periods to differ materially from those currently expected or anticipated. These factors include, but are not limited to: the impact of pandemics and other global crises or catastrophic events on employees, our supply chain, and the demand for our products and services around the world; materially adverse or unanticipated legal judgments, fines, penalties or settlements; conditions in the financial and banking markets, including fluctuations in exchange rates and the inability to repatriate foreign cash; domestic and international economic conditions, including the impact, length and degree of economic downturns on the customers and markets we serve and more specifically conditions in the automotive, construction, aerospace, defense, transportation, food service equipment, consumer appliance, energy, oil and gas and general industrial markets; lower-cost competition; the relative mix of products which impact margins and operating efficiencies in certain of our businesses; the impact of higher raw material and component costs, particularly steel, certain materials used in electronics parts, petroleum based products, and refrigeration components; the impact of higher transportation and logistics costs, especially with respect to transportation of goods from Asia; the impact of inflation on the costs of providing our products and services; an inability to realize the expected cost savings from restructuring activities including effective completion of plant consolidations, cost reduction efforts including procurement savings and productivity enhancements, capital management improvements, strategic capital expenditures, and the implementation of lean enterprise manufacturing techniques; the potential for losses associated with the exit from or divestiture of businesses that are no longer strategic or no longer meet our growth and return expectations; the inability to achieve the savings expected from global sourcing of raw materials and diversification efforts in emerging markets; the impact on cost structure and on economic conditions as a result of actual and potential increases in trade tariffs; the inability to attain expected benefits from acquisitions and the inability to effectively consummate and integrate such acquisitions and achieve synergies envisioned by the Company; increased costs from acquisitions to improve and coordinate managerial, operational, financial, and administrative systems, including internal controls over financial reporting and compliance with the Sarbanes-Oxley Act of 2002, and other costs related to such systems in connection with acquired businesses; market acceptance of our products; our ability to design, introduce and sell new products and related product components; the ability to redesign certain of our products to continue meeting evolving regulatory requirements; the impact of delays initiated by our customers; our ability to increase manufacturing production to meet demand including as a result of labor shortages; the impact on our operations of any successful cybersecurity attacks; and potential changes to future pension funding requirements. For a more comprehensive discussion of these and other factors, see the "Risk Factors" section of the Company's most recent annual report on Form 10-K filed with the SEC and available on the Company's website. In addition, any forward-looking statements represent management's estimates only as of the day made and should not be relied upon as representing management's estimates as of any subsequent date. While the Company may elect to update forward-looking statements at some point in the future, the Company and management specifically disclaim any obligation to do so, even if management's estimates change.

Overview

We are a diversified industrial manufacturer with leading positions in a variety of products and services that are used in diverse commercial and industrial markets. We are headquartered in Salem, New Hampshire, and have six operating segments aggregated into five reportable segments: Electronics, Engineering Technologies, Scientific, Engraving, and Specialty Solutions. Two operating segments are aggregated into Specialty Solutions. Our businesses work in close partnership with our customers to deliver custom solutions or engineered components that solve their unique and specific needs, an approach we call "Customer Intimacy".

Our long-term business strategy is to create, improve, and enhance shareholder value by building more profitable, focused industrial platforms through our Standex Value Creation System. This methodology employs four components: Balanced Performance Plan, Growth Disciplines, Operational Excellence, and Talent Management and provides both a company-wide framework and tools used to achieve our goals. We intend to continue investing organically and inorganically in high margin and growth businesses using this balanced and proven approach.

It is our objective to grow larger and more profitable business units through a commitment to both organic and inorganic initiatives. We have a particular focus on identifying and investing in businesses, new products and new applications that complement our existing products and will increase our overall scale, global presence and capabilities. We continue to execute on acquisitions that are strategically aligned with our businesses and where the opportunity meets our investment metrics. We have divested, and likely will continue to divest, businesses that are not strategic or do not meet our growth and return expectations.

As a result of our portfolio moves over the past several years, we have transformed Standex to a company with a more focused group of businesses selling customized solutions to high value end markets via a compelling customer value proposition. The narrowing of the portfolio allows for greater management focus on driving operational disciplines and positions us well to use our cash flow from operations to invest selectively in our ongoing pipeline of organic and inorganic opportunities.

The Company's strong historical cash flow has been a cornerstone for funding our capital allocation strategy. We use cash flow generated from operations to fund investments in capital assets to upgrade our facilities, improve productivity and lower costs, invest in the strategic growth programs described above, including organic growth, and to return cash to our shareholders through payment of dividends and stock buybacks.

Restructuring expenses reflect costs associated with our efforts of continuously improving operational efficiency and expanding globally in order to remain competitive in our end user markets. We incur costs for actions to size our businesses to a level appropriate for current economic conditions, improve our cost structure, enhance our competitive position and increase operating margins. Such expenses include costs for moving facilities to locations that allow for lower fixed and variable costs, external consultants who provide additional expertise starting up plants after relocation, downsizing operations because of changing economic conditions, and other costs resulting from asset redeployment decisions. Shutdown costs include severance, benefits, stay bonuses, lease and contract terminations, asset write-downs, costs of moving fixed assets, and moving and relocation costs. Vacant facility costs include maintenance, utilities, property taxes and other costs.

Because of the diversity of the Company's businesses, end user markets and geographic locations, management does not use specific external indices to predict the future performance of the Company, other than general information about broad macroeconomic trends. Each of our individual business units serves niche markets and attempts to identify trends other than general business and economic conditions which are specific to its business and which could impact its performance. Those units report pertinent information to senior management, which uses it to the extent relevant to assess the future performance of the Company. A description of any such material trends is described below in the applicable segment analysis.

We monitor a number of key performance indicators ("KPIs") including net sales, income from operations, backlog, effective income tax rate, gross profit margin, and operating cash flow. A discussion of these KPIs is included below. We may also supplement the discussion of these KPIs by identifying the impact of foreign exchange rates, acquisitions, and other significant items when they have a material impact on a specific KPI.

We believe the discussion of these items provides enhanced information to investors by disclosing their impact on the overall trend which provides a clearer comparative view of the KPI, as applicable. For discussion of the impact of foreign exchange rates on KPIs, we calculate the impact as the difference between the current period KPI calculated at the current period exchange rate as compared to the KPI calculated at the historical exchange rate for the prior period. For discussion of the impact of acquisitions, we isolate the effect on the KPI amount that would have existed regardless of such acquisition. Sales resulting from synergies between the acquisition and existing operations of the Company are considered organic growth for the purposes of our discussion.

Unless otherwise noted, references to years are to fiscal years.

Results from Continuing Operations

		Three Months Ended December 31,								Six Months Ended December 31,
(In thousands, except percentages)		2025				2024				2025				2024
Net sales		$	221,320			$	189,814			$	438,751			$	360,278
Gross profit margin			41.7	%			37.6	%			41.6	%			39.3	%
Income from operations			35,573				8,463				65,206				32,562

(In thousands)		Three Months Ended December 31, 2025				Six Months Ended December 31, 2025
Net sales, prior year period		$	189,814			$	360,278
Components of change in sales:
Organic sales change			12,178				12,742
Effect of acquisitions			17,773				63,531
Effect of exchange rates			1,555				2,200
Net sales, current period		$	221,320			$	438,751

Net Sales

Net sales increased in the second quarter of fiscal year 2026 by $31.5 million or 16.6%, when compared to the prior year quarter. Acquisitions accounted for increased sales of $17.8 million or 9.4%. Foreign currency positively impacted sales by $1.6 million, or 0.8%. Organic sales increased $12.2 million, or 6.4%, primarily due to increased sales into fast growth markets and contributions from new products.

Net sales increased in the six months ended December 31, 2025 by $78.5 million or 21.8%, when compared to the prior year period. Acquisitions accounted for increased sales of $63.5 million or 17.6%. Foreign currency positively impacted sales by $2.2 million, or 0.6%. Organic sales increased $12.7 million, or 3.5%, primarily due to increased sales into fast growth markets and contributions from new products.

Gross Profit

Gross profit in the second quarter of fiscal year 2026 increased to $92.2 million, or a gross margin of 41.7% as compared to $71.4 million, or a gross margin of 37.6%, in the second quarter of fiscal year 2025. The margin increase was a result of the continued focus on pricing disciplines and productivity actions.

Gross profit in the six months ended December 31, 2025 increased to $182.7 million, or a gross margin of 41.6% as compared to $141.5 million, or a gross margin of 39.3%, in the prior year period. The margin increase was a result of the continued focus on pricing disciplines and productivity actions.

Selling, General, and Administrative Expenses

Selling, General, and Administrative ("SG&A") expenses for the second quarter of fiscal year 2026 increased to $55.6 million, or 25.1% of sales as compared to $45.7 million, or 24.1% of sales during the prior year quarter. SG&A expenses during the second quarter of fiscal year 2026 were primarily impacted by increased expenses due to the recent acquisitions, research and development initiatives, and U.S. medical costs as compared to the prior year quarter.

Selling, General, and Administrative ("SG&A") expenses for the six months ended December 31, 2025 increased to $110.0 million, or 25.1% of sales as compared to $88.7 million, or 24.6% of sales during the prior year period. SG&A expenses during the six months ended December 31, 2025 were primarily impacted by increased expenses due to the recent acquisitions, research and development initiatives, and U.S. medical costs as compared to the prior year period.

Restructuring Costs

We incurred restructuring expenses of $0.4 million in the second quarter of fiscal year 2026, and $6.4 million in the first six months of fiscal year 2026 primarily related to facility rationalization activities and announced closure of four sites in our Engraving segment. We have substantially completed our restructuring activities in Engraving and are well positioned to better serve our customers.

We expect to start seeing realization of these restructuring actions during the second half of fiscal year 2026.

Acquisition Related Costs

We incurred acquisition related expenses of $0.6 million in the second quarter of fiscal year 2026 and $1.0 million in the first six months of fiscal year 2026. Acquisition related expenses typically consist of due diligence, advisory, legal, integration, and valuation expenses incurred in connection with recent or pending acquisitions.

Income from Operations

Income from operations for the second quarter of fiscal year 2026 was $35.6 million, compared to $8.5 million during the prior year quarter. The increase of $27.1 million, or 320.3%, is primarily due to the contributions from recent acquisitions, productivity improvement initiatives, and lower purchase accounting and acquisition related costs, partially offset by increase in administrative and research and development expenses.

Income from operations for the six months ended December 31, 2025 was $65.2 million, compared to $32.6 million during the prior year period. The increase of $32.6 million, or 100.3%, is primarily due to the contributions from recent acquisitions, productivity improvement initiatives, and lower purchase accounting and acquisition related costs, partially offset by increase in administrative and research and development expenses.

Interest Expense

Interest expense for the second quarter of fiscal year 2026 was $7.9 million, an increase of $2.3 million from the prior year quarter. Interest expense for the six months ended December 31, 2025 was $16.8 million, an increase of $10.3 million from the prior year period. Our effective interest rate for the six months ended December 31, 2025 was 6.03%.

Income Taxes

The Company's effective tax rate from continuing operations for the second quarter of fiscal year 2026 and for the six months ended December 31, 2025 was 24.1% and 24.3%, respectively, compared with 35.5% and 22.6% for the prior year quarter and prior year period, respectively.

The tax rate was impacted in the three and six months ended December 31, 2025 by the following items: (i) changes in the geographic mix of earnings; (ii) the recognition of a discrete tax benefit related to equity compensation; (iii) foreign withholding taxes; and (iv) federal tax credits related to research and development activities.

The tax rate was impacted in the three and six months ended December 31, 2024 by the following items: (i) a discrete tax benefit related to equity compensation, (ii) a discrete tax expense related to the write-off of foreign deferred tax assets, (iii) the jurisdictional mix of earnings, (iv) foreign withholding taxes; and (v) federal research and development tax credits.

Backlog

Backlog includes all active or open orders for goods and services. Backlog also includes any future deliveries based on executed customer contracts, so long as such deliveries are based on agreed upon delivery schedules. Backlog orders are not necessarily an indicator of future sales levels because of variations in lead times and customer production demand pull systems, with the exception of Engineering Technologies. Customers may delay delivery of products or cancel orders prior to shipment, subject to possible cancellation penalties. Due to the nature of long-term agreements in the Engineering Technologies segment, the timing of orders and delivery dates can vary considerably resulting in significant backlog changes from one period to another.

		As of December 31, 2025								As of December 31, 2024
		Total Backlog				Backlog under 1 year				Total Backlog				Backlog under 1 year
Electronics		$	161,863			$	150,207			$	174,720			$	156,881
Engineering Technologies			121,088				90,730				54,189				42,200
Scientific			5,209				5,209				4,561				4,561
Engraving			25,851				24,145				19,088				18,690
Specialty Solutions			11,837				11,795				16,623				16,545
Total		$	325,848			$	282,086			$	269,181			$	238,877

Total backlog realizable under one year increased $43.2 million, or 18.1%, to $282.1 million at December 31, 2025, from $238.9 million at December 31, 2024. The year over year increase is primarily driven by $31.2 million in backlog from the recent acquisition in the Engineering Technologies segment.

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

		As of
(In thousands)		December 31, 2025
Backlog under 1 year, prior year period		$	238,877
Components of change in backlog:
Organic change			12,042
Effect of acquisitions			31,167
Backlog under 1 year, current period		$	282,086

Segment Analysis

Overall

Looking forward to the remainder of fiscal year 2026, we anticipate continued improvement in key financials metrics, supported by productivity initiatives.

In general, for the remainder of fiscal year 2026, we expect:

	•	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 through integration of the Amran/Narayan Group;

•

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

•

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

•

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 improve with partial recovery in NIH funding;

•

refuse and dump end markets to remain stable;

•

stable demand levels in food service equipment markets.

Electronics Group

		Three Months Ended December 31,								%				Six Months Ended December 31,								%
(In thousands, except percentages)		2025				2024				Change				2025				2024				Change
Net sales		$	115,668			$	95,923				20.6	%		$	226,220			$	173,656				30.3	%
Income from operations			29,765				17,419				70.9	%			58,048				34,447				68.5	%
Operating income margin			25.7	%			18.2	%							25.7	%		19.8		%

Net sales in the second quarter of fiscal year 2026 increased $19.7 million, or 20.6%, when compared to the prior year quarter. The recent acquisitions added $8.7 million, or 9.1%, in sales for the second quarter of fiscal year 2026. Organic sales increased by $10.6 million, or 11.1%, due to sales into fast growth markets and increased new product sales. The foreign currency impact increased net sales by 0.4% as compared to the prior year quarter.

Income from operations in the second quarter of fiscal year 2026 increased by $12.4 million, or 70.9%, when compared to the prior year quarter. The operating income increase was the result of higher volume, pricing initiatives and product mix.

Net sales in the six months ended December 31, 2025 increased $52.6 million, or 30.3%, when compared to the prior year quarter. The recent acquisitions added $44.5 million, or 25.6%, in sales for the six months ended December 31, 2025. Organic sales increased by $7.8 million, or 4.5%, due to sales into fast growth markets and increased new product sales. The foreign currency impact increased net sales by 0.2% as compared to the prior year quarter.

Income from operations in the six months ended December 31, 2025 increased by $23.6 million, or 68.5%, when compared to the prior year quarter. The operating income increase was the result of higher volume, pricing initiatives and product mix.

In the third quarter of fiscal year 2026, on a sequential basis, we expect slightly to moderately higher revenue, reflecting higher sales into fast growth end markets and from new products. The Company expects similar operating margin, primarily driven by product mix and continued strategic growth investments.

Engineering Technologies Group

		Three Months Ended December 31,								%				Six Months Ended December 31,								%
(In thousands, except percentages)		2025				2024				Change				2025				2024				Change
Net sales		$	30,636			$	22,649				35.3	%		$	60,530			$	43,179				40.2	%
Income from operations			4,377				3,692				18.6	%			7,994				7,702				3.8	%
Operating income margin			14.3	%			16.3	%							13.2	%		17.8		%

Net sales in the second quarter of fiscal year 2026 increased by $8.0 million, or 35.3%, when compared to the prior year quarter. Sales increase was attributable to the acquisition of McStarlite which added $7.6 million to revenue and an organic sales increase of $0.3 million or 1.2% was suppressed by delays in customer project timing.

Income from operations in the second quarter of fiscal year 2026 increased by $0.7 million, or 18.6%, when compared to the prior year quarter. The increase in operating income was a result of higher volume.

Net sales in the six months ended December 31, 2025 increased by $17.4 million, or 40.2%, when compared to the prior year quarter. Sales increase was attributable to the acquisition of McStarlite which added $14.2 million to revenue and an organic sales increase of $2.9 million or 6.7% driven by growth in the space and aviation end markets.

Income from operations in the six months ended December 31, 2025 increased by $0.3 million, or 3.8%, when compared to the prior year quarter. The increase in operating income was a result of higher volume.

In the third quarter of fiscal year 2026, on a sequential basis, we expect significantly higher revenue, due to growth in new product sales and more favorable project timing, and slightly to moderately higher operating margin due to higher volume.

Scientific Group

		Three Months Ended December 31,								%				Six Months Ended December 31,								%
(In thousands, except percentages)		2025				2024				Change				2025				2024				Change
Net sales		$	19,502			$	18,477				5.5	%		$	38,952			$	36,170				7.7	%
Income from operations			4,488				4,718				(4.9	%)			9,167				9,467				(3.2	%)
Operating income margin			23.0	%			25.5	%							23.5	%			26.2	%

Net sales in the second quarter of fiscal year 2026 increased by $1.0 million, or 5.5%, when compared to the prior year quarter due primarily to an 8.1% benefit from the Custom Biogenic Systems acquisition, partially offset by an organic decline of 2.6% from lower demand at academic and research institutions that were impacted by NIH funding cuts.

Income from operations in the second quarter of fiscal year 2026 decreased $0.2 million, or 4.9%, when compared to the prior year quarter due to organic decline partially offset by contribution from the acquisition.

Net sales in the six months ended December 31, 2025 increased by $2.8 million, or 7.7%, when compared to the prior year quarter due primarily to an 13.3% benefit from the Custom Biogenic Systems acquisition, partially offset by an organic decline of 5.6% from lower demand at academic and research institutions that were impacted by NIH funding cuts.

Income from operations in the six months ended December 31, 2025 decreased $0.3 million, or 3.2%, when compared to the prior year quarter due to organic decline partially offset by contribution from the acquisition.

In the third quarter of fiscal year 2026, on a sequential basis, we expect similar revenue and slightly lower operating margin due to product mix, investments in research and development, and tariff costs, partially offset by pricing and productivity initiatives.

Engraving Group

		Three Months Ended December 31,								%				Six Months Ended December 31,								%
(In thousands, except percentages)		2025				2024				Change				2025				2024				Change
Net sales		$	35,728			$	31,454				13.6	%		$	71,568			$	64,817				10.4	%
Income from operations			6,568				4,122				59.3	%			13,104				9,946				31.8	%
Operating income margin			18.4	%			13.1	%							18.3	%			15.3	%

Net sales in the second quarter of fiscal year 2026 increased by $4.3 million, or 13.6%, when compared to the prior year quarter. Organic sales increased by $3.2 million, or 10.3%, due to improved demand in Europe and North America. Foreign currency positive impacts on net sales were $1.0 million, or 3.3%.

Income from operations in the second quarter of fiscal year 2026 increased by $2.4 million, or 59.3%, when compared to the prior year quarter. The operating income increase was driven by organic sales increase and the realization of previously announced productivity initiatives and restructuring actions.

Net sales in the six months ended December 31, 2025 increased by $6.8 million, or 10.4%, when compared to the prior year quarter. Organic sales increased by $5.1 million, or 7.9%, due to improved demand in Europe and North America. Foreign currency positive impacts on net sales were $1.7 million, or 2.6%.

Income from operations in the six months ended December 31, 2025 increased by $3.2 million, or 31.8%, when compared to the prior year quarter. The operating income increase was driven by organic sales increase and the realization of previously announced productivity initiatives and restructuring actions.

In the third quarter of fiscal year 2026, on a sequential basis, we expect similar revenue and slightly lower operating margin due to project and regional mix.

Specialty Solutions Group

		Three Months Ended December 31,								%				Six Months Ended December 31,								%
(In thousands, except percentages)		2025				2024				Change				2025				2024				Change
Net sales		$	19,786			$	21,311				(7.2	%)		$	41,481			$	42,457				(2.3	%)
Income from operations			2,112				3,562				(40.7	%)			5,000				7,110				(29.7	%)
Operating income margin			10.7	%			16.7	%							12.1	%			16.7	%

Net sales in the second quarter of fiscal year 2026 decreased by $1.5 million, or 7.2%, when compared to the prior year quarter primarily due to lower demand in food service equipment and refuse and dump end markets.

Income from operations in the second quarter of fiscal year 2026 decreased $1.5 million, or 40.7%, when compared to the prior year quarter, due to lower volume and higher tariff costs which have been partly offset by increased pricing.

Net sales in the six months ended December 31, 2025 decreased by $1.0 million, or 2.3%, when compared to the prior year quarter primarily due to lower demand in food service equipment and refuse and dump end markets.

Income from operations in the six months ended December 31, 2025 decreased $2.1 million, or 29.7%, when compared to the prior year quarter, due to the lower volume and higher tariff costs which have been partly offset by increased pricing.

In the third quarter of fiscal year 2026, on a sequential basis, we expect moderately to significantly higher revenue and operating margin.

Corporate and Other

		Three Months Ended December 31,								%				Six Months Ended December 31,								%
(In thousands, except percentages)		2025				2024				Change				2025				2024				Change
Income from operations:
Corporate		$	10,682			$	7,730				38.2	%		$	20,622			$	15,864				29.99	%
Acquisition related costs			617				16,400				(96	%)			1,049				18,240				(94.2	%)
Restructuring costs			438				920				(52.4	%)			6,436				2,006				220.8	%

Corporate expenses in the second quarter and first six months of fiscal year 2026 increased as compared to the prior year periods primarily due to increase in variable compensation and employee medical costs.

The restructuring and acquisition related costs have been discussed above in the Company Overview.

Discontinued Operations

In pursuing our business strategy, we may divest certain businesses. Future divestitures may be classified as discontinued operations based on their strategic significance to the Company. Net income (loss) from discontinued operations was less than $0.1 million for the three and six months ended December 31, 2025 and less than $(0.1) million for the three and six months ended December 31, 2024.

Liquidity and Capital Resources

At December 31, 2025, our total cash balance was $97.0 million, of which $77.8 million was held by foreign subsidiaries. The amount and timing of cash repatriation is dependent upon foreign exchange rates and each business unit's operational needs including requirements to fund working capital, capital expenditure, and jurisdictional tax payments. The repatriation of cash balances from certain of our subsidiaries could have adverse tax consequences or be subject to capital controls; however, those balances are generally available without legal restrictions to fund ordinary business operations.

Net cash provided by continuing operating activities for the six months ended December 31, 2025, was $37.5 million compared to net cash provided by continuing operating activities of $26.7 million in the prior year period. We generated $58.4 million from income statement activities and used $20.9 million of cash to fund working capital and other balance sheet increases. Cash flow used in investing activities for the six months ended December 31, 2025 totaled $14.1 million and consisted primarily of cash used for capital expenditures. Cash used for financing activities for the six months ended December 31, 2025 totaled $30.1 million and consisted primarily of repayments of borrowings of $26.0 million, cash paid for dividends of $7.9 million, and treasury stock related taxes of $3.8 million, and borrowings of $8.0 million.

Net cash provided by continuing operating activities for the six months ended December 31, 2024, was $26.7 million. We generated $39.3 million from income statement activities and used $7.9 million of cash to fund working capital and other balance sheet increases. Cash flow used in investing activities for the six months ended December 31, 2024 totaled $429.4 million and consisted of $419.7 million for the acquisition of businesses, net of cash acquired, $13.7 million used for capital expenditures offset by $3.5 million in life insurance proceeds and $0.4 million proceeds from sales of real estate and equipment. Cash used for financing activities for the six months ended December 31, 2024 totaled $370.1 million and consisted primarily of borrowings of $724.3 million, repayments of $339.1 million, $4.4 million in related financing fees, purchases of stock of $5.2 million and cash paid for dividends of $7.4 million.

Under the terms of the Credit Facility, we pay a variable rate of interest and a commitment fee on borrowed amounts as well as a commitment fee on unused amounts under the facility. The amount of the commitment fee depends upon both the undrawn amount remaining available under the facility and the funded debt to EBITDA (as defined in the agreement) ratio at the last day of each quarter. As our funded debt to EBITDA ratio increases, the commitment fee increases.

Funds borrowed under the facility may be used for the repayment of debt, working capital, capital expenditures, acquisitions (so long as certain conditions, including a specified funded debt to EBITDA leverage ratio, are maintained), and other general corporate purposes.

During the second quarter of fiscal year 2025, we entered into a $250 million 364-day term loan with existing lenders. Also, during the period, we converted the 364-day term loan into an exercise of the accordion feature under our existing credit facilities. In connection with the conversion of the loan, we entered into a Second Amendment to Third Amended and Restated Credit Agreement. This amendment expanded the total available credit under the Revolving Credit Agreement from $500 million to $825 million. As of December 31, 2025, we used $3.5 million against the letter of credit sub-facility and had the ability to borrow $212.6 million under the facility based on our current trailing twelve-month EBITDA. The facility contains customary representations, warranties and restrictive covenants, as well as specific financial covenants. Current financial covenants under the facility are as follows:

Interest Coverage Ratio We are required to maintain a ratio of Earnings Before Interest and Taxes, as Adjusted ("Adjusted EBIT per the Credit Facility"), to interest expense for the trailing twelve months of at least 2.75:1. Adjusted EBIT per the Credit Facility specifically excludes extraordinary and certain other defined items such as cash restructuring and acquisition related charges up to the lower of $20.0 million or 10% of EBITDA. The facility also allows for unlimited non-cash purchase accounting and goodwill adjustments. At December 31, 2025, the Interest Coverage Ratio was 4.33:1.

Leverage Ratio The ratio of funded debt to trailing twelve month Adjusted EBITDA per the Credit Facility, calculated as Adjusted EBIT per the Credit Facility plus depreciation and amortization, may not exceed 3.5:1. Under certain circumstances in connection with a Material Acquisition (as defined in the Facility), the Facility allows for the leverage ratio to go as high as 4.0:1 for a four-fiscal quarter period. At December 31, 2025, the leverage ratio was 2.55:1.

As of December 31, 2025, we had borrowings under our facility of $534.7 million. In order to manage our interest rate exposure on these borrowings, we are party to $225 million of active floating to fixed rate swaps. These swaps convert our interest payments from SOFR to a weighted average fixed rate of 3.48%. The effective rate of interest for our outstanding borrowings, including the impact of the interest rate swaps, was 6.03%.

Our primary cash requirements in addition to day-to-day operating needs include interest payments, capital expenditures, acquisitions, share repurchases, and dividends. Our primary sources of cash for these requirements are cash flows from continuing operations and borrowings under the facility. We expect fiscal year 2026 capital spending to be between $33.0 million and $38.0 million. We expect that fiscal year 2026 depreciation and amortization expense will be between $24.0 million and $26.0 million and $15.5 million and $17.5 million, respectively.

The following table sets forth our capitalization:

(In thousands)		December 31, 2025				June 30, 2025
Long-term debt		$	534,733			$	552,515
Less cash and cash equivalents			(96,998	)			(104,542	)
Net (cash) debt			437,735				447,973
Total stockholders' equity			700,236				711,677
Total capitalization		$	1,137,971			$	1,159,650

We sponsor a number of defined benefit and defined contribution retirement plans. The U.S. pension plan is frozen for substantially all participants. We have evaluated the current and long-term cash requirements of these plans, and our existing sources of liquidity are expected to be sufficient to cover required contributions under ERISA and other governing regulations.

The fair value of our U.S. defined benefit pension plan assets was $149.7 million at December 31, 2025, as compared to $146.4 million at the most recent measurement date, which occurred as of June 30, 2025. The next measurement date to determine plan assets and benefit obligations will be on June 30, 2026.

Contributions of $2.8 million and $4.8 million were made during the six months ended December 31, 2025 and 2024, respectively. We expect to pay $4.1 million in contributions to our defined benefit plans during the remainder of fiscal year 2026 comprising of $3.8 million and $0.3 million to our unfunded defined benefit plans in the U.S. and Germany, respectively. There are no required contributions to the plans in Japan or the U.K. Any subsequent plan contributions will depend on the results of future actuarial valuations.

We have an insurance program in place to fund supplemental retirement income benefits for two retired executives. Current executives and new hires are not eligible for this program. At December 31, 2025, the underlying policies had a cash surrender value of $6.8 million and are reported net of loans of $2.7 million for which we have the legal right of offset, these amounts are reported net on our balance sheet.

Other Matters

Tariff - Several of our segments may be impacted by recent tariff announcements. While we cannot predict the impact of potential new tariffs on global trade and economic growth, our regional presence, strong customer relationships, and our disciplined approach to pricing and productivity actions position us well to manage through these challenges. We monitor the regulatory environment and continue to make adjustments whenever it is deemed necessary. Most of our supply chain is strategically located to service regional demand. We plan to continue to invest in our key strategic growth priorities while closely managing our cost structure and driving productivity and pricing actions and seeking alternate sources of supply to further reduce the impact of tariffs as appropriate.

Inflation - Certain of our expenses, such as wages and benefits, occupancy costs, freight and equipment repair and replacement, are subject to normal inflationary pressures. Inflation for medical costs can impact both our employee benefit costs as well as our reserves for workers' compensation claims. We monitor the inflationary rate and make adjustments to reserves whenever it is deemed necessary. Our ability to control worker compensation insurance medical cost inflation is dependent upon our ability to manage claims and purchase insurance coverage to limit our maximum exposure. Each of our segments is subject to the effects of changing raw material costs caused by the underlying commodity price movements. We have experienced price fluctuations for a number of materials including rhodium, steel, and other metal commodities. These materials are some of the key elements in the products manufactured in these segments. Wherever possible, we will implement price increases to offset the impact of changing prices. The ultimate acceptance of these price increases will be impacted by our affected divisions' respective competitors and the timing of their price increases. In general, we do not enter into purchase contracts that extend beyond one operating cycle. While Standex considers our relationship with our suppliers to be good, there can be no assurances that we will not experience any supply shortage.

Foreign Currency Translation - Our primary functional currencies used by our non-U.S. subsidiaries are the Euro, British Pound Sterling (Pound), Japanese (Yen), Peso, Chinese (Yuan) and Indian (Rupee).

Defined Benefit Pension Plans - We record expenses related to these plans based upon various actuarial assumptions such as discount rates, mortality rates, and assumed rates of returns. Our pension plan is frozen for substantially all eligible U.S. employees and participants in the plan have ceased accruing future benefits.

Environmental Matters - To the best of our knowledge, we believe that we are presently in substantial compliance with all existing applicable environmental laws and regulations and do not anticipate any instances of non-compliance that will have a material effect on our future capital expenditures, earnings or competitive position.

Seasonality - We are a diversified business with generally low levels of seasonality.

Employee Relations - We have labor agreements with several union locals in the United States and several European employees belong to European trade unions.

Critical Accounting Policies

The condensed consolidated financial statements include the accounts of Standex International Corporation and all of its subsidiaries. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying condensed consolidated financial statements. Although we believe that materially different amounts would not be reported due to the accounting policies adopted, the application of certain accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. Our Annual Report on Form 10-K for the year ended June 30, 2025 lists a number of accounting policies which we believe to be the most critical.