SXI Q3 Deep Dive: Acquisitions, New Products, and Fast-Growth Markets Offset Margin Pressures

Industrial manufacturer Standex (NYSE:SXI) reported Q3 CY2025 results exceeding the market’s revenue expectations, with sales up 27.6% year on year to $217.4 million. Its non-GAAP profit of $1.99 per share was 4.4% above analysts’ consensus estimates.

Is now the time to buy SXI? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Standex’s third quarter results for 2025 came in above Wall Street’s expectations for both revenue and adjusted earnings per share, but the market responded negatively, with the stock declining after the announcement. Management pointed to robust growth from newly launched products and continued expansion in fast-growth markets as key drivers. CEO David Dunbar highlighted a record order intake and strong performance from the recently acquired Standex Electronics Grid business, but also acknowledged that organic growth in the core electronics segment was challenged by customer project delays and a facility closure.

Looking ahead, Standex’s outlook is shaped by ongoing investments in growth, a ramp-up in new product launches, and the scaling of its grid modernization platforms. Management expects the company’s expanded presence in Croatia and Mexico to support rising demand in Europe and the Americas, particularly across data centers and electrification projects. CFO Ademir Sarcevic noted, however, that margin improvements will be partially offset by increased spending on growth initiatives and less favorable product mix, with Dunbar stating, “We remain on track to achieve our long-term targets, but are mindful of potential disruptions in global trade and tariffs.”

Key Insights from Management’s Remarks

Management emphasized that acquisitions, new product launches, and expansion into fast-growth markets were central to the quarter’s performance, while cost controls and restructuring in legacy segments provided additional support.

• Acquisition-driven sales boost: The acquisition of Amran/Narayan (now Standex Electronics Grid) was a major contributor to revenue growth, with the business achieving its highest ever quarterly sales and driving strong demand in electrification, data centers, and grid modernization markets.
• New product momentum: Over $14 million in sales from new products was achieved during the quarter, with management noting that more than 15 launches are planned for the year—many in fast-growing or higher-margin categories.
• Fast-growth market expansion: Sales into fast-growth end markets approached $62 million, making up 30% of total company revenue. Geographical expansion, particularly into Croatia and Mexico, is expected to further support these markets.
• Cost structure optimization: The company closed four facilities in the Engraving segment, mostly in the U.K., U.S., Italy, and China, which is expected to generate $5 million in annualized savings. These actions are designed to improve efficiency and margins as demand stabilizes.
• Segment performance divergence: While the Electronics segment saw organic declines due to site closures and customer delays, the Engineering Technologies segment benefited from defense and space market demand, and the Scientific segment was impacted by reduced academic funding, reflecting mixed end-market conditions.

Drivers of Future Performance

Standex’s near-term outlook is driven by continued investment in new product development, geographic expansion, and leveraging its acquisition pipeline, but faces headwinds from growth spending and product mix shifts.

• Ongoing new product launches: Management expects over 15 new products to be introduced this year, with a focus on higher-margin and fast-growth end markets. These launches are projected to contribute approximately 300 basis points of incremental sales growth.
• Geographic and segment expansion: The company is ramping up operations in Croatia and Mexico, aiming to capitalize on European and North American demand for grid modernization, electrification, and data center infrastructure. These investments are expected to support mid- to high single-digit organic growth in Electronics.
• Margin pressures from investments: While operating margins are expected to remain stable, increased investments in growth initiatives and a less favorable product mix are likely to partially offset the benefits from cost savings and operational efficiency programs, as highlighted by CFO Ademir Sarcevic.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will be tracking (1) the pace and success of new product launches, (2) ramp-up and utilization of the new Croatia and Mexico facilities to meet regional demand, and (3) cost savings materializing from recent restructuring in the Engraving segment. We’ll also watch for signs of recovery in Scientific and Specialty Solutions as funding and demand trends evolve.

Standex currently trades at $233.23, down from $239.11 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).

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