Standex expands credit facility to $825 million

In a significant financial restructuring, Standex International Corporation (NYSE:SXI), a $2.49 billion market cap industrial company with a "GOOD" InvestingPro Financial Health rating, has amended its credit agreement to increase its borrowing capacity. The company, a key player in the refrigeration and service industry machinery sector, announced the expansion of its credit facility from $500 million to $825 million on December 6, 2024.

The amendment involves the addition of two new lenders, PNC Bank, National Association, and The Huntington National Bank, with PNC Bank also named as a Co-Documentation Agent. The adjustment to the Third Amended and Restated Credit Agreement, initially dated February 2, 2023, and first amended on October 28, 2024, was facilitated by Citizens Bank, N.A., acting as the Administrative Agent. With a healthy current ratio of 3.55 and moderate debt levels, InvestingPro data shows Standex maintains strong liquidity to support this expansion.

Concurrent with this amendment, Standex utilized a portion of the new credit to pay off and terminate a $250 million Term Loan Credit Agreement. This term loan had previously been used to finance the Amran Transaction (JO:TCPJ) and the Narayan Transaction, as reported in a prior Form 8-K filed on October 31, 2024.

The details of the amendment, which are filed with the Securities and Exchange Commission, reveal that aside from the increased credit capacity and the addition of new lenders, the material terms of the original Revolving Credit Agreement remain unchanged.

This financial maneuvering by Standex underscores the company's strategic approach to managing its capital structure and supports its ongoing operations and potential future transactions.

The company's financial strength is further evidenced by its 54-year track record of consecutive dividend payments. For deeper insights into Standex's financial position and growth prospects, investors can access the comprehensive Pro Research Report available on InvestingPro, which provides detailed analysis of the company's valuation, financial health, and market position among 1,400+ top US stocks.

In other recent news, Standex International Corporation has made significant strides in expanding its operations. Standex recently acquired Custom Biogenic Systems (CBS), a cryogenic equipment manufacturer, for $6.2 million. This acquisition is projected to contribute to Standex's earnings and extend its market reach within the scientific refrigeration market.

Standex also reported a decline in sales by 7.7% for the fiscal first quarter of 2025, despite maintaining a record gross margin above 40% and an operating margin near 16%. The company's total revenue for the quarter stood at $170.5 million, with an adjusted operating margin of 15.9% and adjusted earnings per share of $1.71.

In addition to CBS, Standex also acquired Amran Instrument Transformers and Narayan Powertech for $462 million. This strategic move is expected to enhance various financial metrics and expand Standex's reach into fast-growth markets. The Amran/Narayan Group is projected to generate approximately $100 million in revenue in 2024, with an adjusted EBITDA margin exceeding 40%.

Furthermore, Standex is planning to launch new products across all business lines in fiscal year 2025, targeting a net leverage ratio below 1 within 24 months post-acquisition. The company is focusing on debt repayment and expects to improve operating margins and gross margins, aiming for the mid-20% range in the near future.

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