Standex International reports strong performance and reaching new financial records as it lays plans to acquire Japanese company Sanyu Switch while absorbing another recent acquisition, Minntronix — both deals adding to its portfolio of magnetic components and global operations. Based in Salem, New Hampshire, Standex is the parent company of Standex Electronics, headquartered in Fairfield, Ohio, a major producer of Reed switch-based sensor solutions and electromagnetic components. In recent years, the group has acquired a string of magnetic and electronic component companies.
“We followed a record fiscal year 2023 with a strong fiscal first quarter performance that further highlights the quality of our businesses,” said David Dunbar president and CEO on November 2, commenting on the results of its first quarter 2024 which closed September 30. “Sales from fast growth markets such as electric vehicles, renewable energy, smart grid and the commercialization of space increased approximately 20% year on year to $20 million in fiscal first quarter 2024,” he noted.
The company expects to break $100 million in sales in those markets for the year. Full-company sales for the quarter were $184.8 million, up 2.3% from the same period a year ago. For the quarter, gross margin of 39.5% and operating margin of 15.9% both set records. “In addition, we generated free cash flow of $12.1 million, our highest ever in a fiscal first quarter, following record free cash flow in fiscal year 2023,” added Dunbar.
Both more internal growth and more acquisitions appear likely to be on the horizon. “Standex’s consistent cash generation and substantial financial flexibility position us well to pursue a very active pipeline of organic and inorganic growth opportunities,” Dunbar noted.
Sanyu Switch deal expected to close before end of January
Just one day earlier, on November 1, Standex announced that it has entered into a definitive agreement, through its subsidiary Standex Electronics Japan Corporation, to acquire privately-held, Japanese-based Sanyu Switch Co., Ltd. The transaction is expected to close before January 31, 2024, subject to regulatory approvals.
“We are very pleased to be acquiring Sanyu which strengthens Electronics’ relay product line and technology. Sanyu’s customer base and product line are highly complementary to our existing business with the potential to further expand key account relationships and capitalize on cross-selling opportunities, commented Dunbar. “The combination of Sanyu with our existing Electronics business continues Standex’s portfolio strategy of focusing our higher-margin business segments in faster-growing markets.”
Akira Unoki, Representative Director of Sanyu Switch Co., Ltd., stated, “We have established a foundation centered on high-quality products and an integrated culture. Joining a global leader like Standex allows us to continue building on the legacy of the last 50 years.”
With corporate headquarters in Tokyo, Sanyu Switch produces some 70,000 reed relays per day. Its primary manufacturing facility in Kumamoto, Japan has fully automated manufacturing lines from incoming inspection to final shipment inspection and packaging. It also has a factory in Shanghai, and operates Sanyu Electric, Inc., a California corporation.
Minntronix acquisition onboard
The acquisition of privately-held, South Dakota-based Minntronix came in July for approximately $30 million in cash, funded from Standex’s existing cash balance. “We are very pleased to have acquired Minntronix, a great strategic fit, expanding our presence in fast growth end markets in 5G, smart grid, and industrial automation,” said Dunbar.
Minntronix designs and manufactures customized as well as standard magnetics components and products including transformers, inductors, current sensors, coils, chokes and filters. The products are used in applications across cable fiber, smart meters, industrial control and lighting, electric vehicles and home security markets.
Commenting on the transaction, Lew Tollefson, president and CEO of Minntronix, stated “We are excited to join a global leader that provides a strong foundation for our continued growth. Standex’s ownership offers us the opportunity to leverage a much broader geographical presence, additional engineering expertise, complementary product offerings, and enhanced customer relationships.”