CJS Securities Investor Presentation

CJS SECURITIES
16TH Annual “NEW IDEAS FOR THE NEW YEAR”
Investor Conference – Group Presentation
January 13, 2016
Safe Harbor Statement
Statements contained in this presentation 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," ”intends,”
"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 may cause the actual results of operations in future periods to
differ materially from those currently expected or desired. These factors include, but are not limited to material adverse or
unforeseen 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, general and international recessionary economic
conditions, including the impact, length and degree of the current slow growth conditions on the customers and markets we
serve and more specifically conditions in the food service equipment, automotive, construction, aerospace, energy,
transportation and general industrial markets, lower-cost competition, the relative mix of products which impact margins and
operating efficiencies, both domestic and foreign, in certain of our businesses, the impact of higher raw material and
component costs, particularly steel, petroleum based products and refrigeration components, an inability to realize the
expected cost savings from restructuring activities, effective completion of plant consolidations, cost reduction efforts,
restructuring including procurement savings and productivity enhancements, capital management improvements, strategic
capital expenditures, and the implementation of lean enterprise manufacturing techniques, the inability to achieve the
savings expected from the sourcing of raw materials from and diversification efforts in emerging markets, the inability to
attain expected benefits from strategic alliances or acquisitions and the inability to achieve synergies contemplated by the
Company. Other factors that could impact the Company include changes to future pension funding requirements and factors
discussed in the Annual Report of Standex on Form 10-K for the fiscal year ending June 30, 2015, which is on file with the
Securities and Exchange Commission (“SEC”) and any subsequent periodic reports filed by Standex with the SEC. 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.
2
Standex at a Glance
Multi-industry manufacturer in five broad segments
TTM
Q1 FY 16
Sales
Adj EBIT
EBIT %
Adj EBITDA
EBITDA %
FSEG*
$402,086
$39,935
9.9%
$45,161
11.2%
Engraving
$116,214
$27,214
23.4%
$30,742
26.5%
Engineering
Technologies*
$95,610
$12,335
12.9%
$17,051
17.8%
Electronics
$112,712
$20,888
18.5%
$23,541
20.9%
Corporate &
Hydraulics
Non-Operating
$41,891
$7,267
($22,056)
17.3%
$7,920
($21,748)
18.9%
Total TTM
Q1 FY 16
$768,513
$85,583
11.1%
$102,667
13.4%
* Excludes purchase accounting adj. and special items
TTM Q1 FY 16 Sales
Geographic Sales
Asia, 6%
Electronics
15%
Europe,
15%
Eng. Tech
13%
Americas,
79%
Engraving,
15%
TTM Q1 FY 16 Adj. EBITDA *
Hydraulics,
5%
Electronics
, 19%
Hydraulics,
6%
Engineerin
g Tech,
14%
FSEG,
52%
FSEG,
36%
Engraving,
25%
* Percentages exclude Corporate & Non-Operating
3
Investment Highlights


Strong Brands in profitable niches

Attractive growth and margin potential in all businesses

Clear plan of margin improvement in our biggest segment, Food Service
Disciplined operator

Consistent cash flow and disciplined working capital management

Strong balance sheet

Proven ability to integrate acquisitions

Paid consecutive quarterly dividends since going public in 1964

Experienced management team
4
Standex 2020 Vision
 Become an operating company composed of larger strategic
business platforms.
 Deliver above-market total shareholder return.
 Forge long-term customer relationships by delivering custom
solutions to critical problems.
 Be an employer of choice.
 Be a valued and recognized member of our communities.
5
Standex Value Creation System: Our Operating Process
Introduced in FY2015
BPP:
Balanced
Performance Plan
Our process for assuring
goal alignment throughout
the corporation,
conducting regular reviews
with the business to
assure target
achievement, crossplatform synergies and
progress on strategic
priorities
• Standard reporting
and analysis
templates
• Transparent
communication with
businesses
• Quarterly reviews with
CEO
Standex
OpEx
Standex
Growth Disciplines
Talent
Management
The way we drive
customer value
through continuous
improvement
processes
The way we identify
growth opportunities,
test them efficiently
and invest in the best
to grow profitably.
The growth disciplines
drive organic and
inorganic investment
priorities
The way we attract,
retain and develop the
best employees and
engage them to
achieve consistent,
high performance
• Standard Operating
Playbook
• Site by site
transformation
plans and goals
• OpEx leaders as
resources to
businesses
• Standard Playbook
• Specific growth
laneway targets in
each business
• Growth Discipline
leaders as
resources to
businesses
• Employee Surveys
and regular
communication
• Individual Goal
Management
• Broad internal
postings
• Training and
development
6
Key Financial Objectives
1. Top-line performance:
Four long-term
financial objectives
3-5 Years

Organic revenue growth at GDP +2-3% per
year

Acquisition-driven revenue growth of 3-4%
per year
2. Exceed 15% overall company
EBITDA
3. Free Cash Flow Conversion of 100%
or more

Working capital turns average 6.0 or better
4. Increasing Returns on Net Assets
7
SXI Results versus key financial targets
8
Food Service Equipment Group
9
Food Service Equipment
Food Service Equipment Group – An Evolution
Hot
BKI- Acquired 1977
Cold
MasterBilt- Acquired 1971
Specialty
Procon Products- Acquired 1966
Rotisseries
AAI- Acquired 2007
Remote Reach-in
Refrigerator/Freezer
Countertop Cooking Equipment
and Deck Ovens
Rack Refrigeration
NorLake- Acquired 2003
Beverage Pumps
Federal Industries- Acquired 1986
TriStar- Bolt-on to AAI 2010
Reach-in
Refrigerator/Freezer
Walk-in
Refrigeration/Freezer
Ranges
Ultrafryer- Acquired 2014
Fryers
Hot/Cold
Display Cases
Environmental Rooms
Open Air Merchandisers
Ultra-low Scientific
KoolStar- Bolt-on to MasterBilt 2006
10
Food Service Equipment
The Food Service Equipment Group has 4 divisions:
refrigeration, cooking, merchandising & pumps
Food Service Equipment Group
FSEG Sales by Division
FY2015, Total Sales = $409M
Refrigerated
Solutions
Merchandising/
Pumps
16%
Cooking
Solutions
29%
55%
Merchandising
Cooking
Solutions
Refrigerated
Solutions
Pumps
11
Food Service Equipment
We serve a variety of customers …
Food Service
Food Retail
(QSR, Fast Casual, Casual
Chain)
(Dollar, Drug, Convenience
& Grocery Stores)
Institutional
Food Service
Beverage
Scientific
Customer
Examples
Types of
Products
FY2015
Sales
 Cooling & freezing
cabinets & walk-ins
 Ovens
 Char-broilers
 Fryers
 Roller grills
 Toasters
 Warmers
~65%
 Cooling & freezing
cabinets & walk-ins
 Merchandizers
 Roller grills
 Toasters
 Foodwells
 Rotisseries
 Fryers
~20%
 Ranges
 Ovens
 Walk-in coolers
~4%
 Pumps
~5%
 Laboratory &
pharmacy
refrigerators
and freezers
~4%
Customer intimacy is a key priority in everything we do
12
Food Service Equipment
13
Food Service Equipment
14
Food Service Equipment
Margin Improvement Plan Elements
OpEx Initiatives
Material Savings


Decrease material costs by improving sourcing
strategy
Actions taken:
 Appointed VP Strategic Sourcing
 Leveraging spend across all FSEG
businesses
 Commodities-based price reduction work
Organizational Realignment &
Talent Management




Simplify org, eliminate redundant positions
Grow sales without adding new SG&A heads
Introduce talent management process
Actions taken:
 Reduced P&L complexity (7 to 4 P&Ls)
 New Group President
 Internal promotion Cooking President


Focus on VSM, 6S, Standard Work, Visual
Management, RCCM and Safety
Actions taken:
 Completed Cheyenne consolidation
 Dedicated OpEx leader
 Lean assessments completed in all sites;
VSMs completed in 6 operations
 Launched Strategy Deployment
Product Portfolio




Eliminate low margin products
Provide customized solutions (customer
intimacy)
Introduce new products that are priced right
and target the right customer problems
Actions taken:
 Divested AFS & BevLes
 Ongoing pruning in cooking line
… complemented by new products & geographical expansion to drive growth
15
Food Service Equipment
We have made investments in people and process to
ensure our success going forward
People
•
•
Simplified the organizational structure
from 7 P&Ls operating in separate silos to
4 divisions with talented leadership
• New FSEG President
• Internal promotion for Cooking Solutions
Group President
• New Procon leader following a
retirement
Complemented the 4 divisions with FSEGwide Strategic Sourcing, Operational
Excellence and Human Resource leaders
Process
•
•
Initiated Strategy Deployment (X-matrix) at
FSEG – ensures alignment and execution
• Bringing team together on quarterly
basis for ongoing learning,
benchmarking, engagement
• Team’s objectives are 100% aligned
with Standex 2020 vision and Strategy
Deployment goals
Next: launch new sales funnel
management process
FY 2016 Strategy Deployment Matrix (L1)
Food Service Equipment Group
HOW?
Top Level
Improvement
Priorities
HOW
FAR?
Annual
Breakthrough
Objectives
Targets to
Improve
HOW
MUCH?
WHO?
3-5 Year
Breakthrough
Objectives
Resources to Deploy
WHAT?
Primary
Secondary
Responsibility
Responsibility
Anne De Greef-Safft
Rev; Date
16