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The Company’s financial liabilities based upon Level 3 inputs comprise of contingent consideration arrangement relating to its acquisition of SEPL in the event that certain financial targets are achieved during the two years following its acquisition in the fourth quarter of fiscal year 2024. The Company has determined the fair value of the liabilities for the contingent consideration based on an evaluation of the probability and amount of any deferred compensation that has been earned to date. This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement within the fair value hierarchy. The fair value of the contingent consideration liability associated with future payments was based on several factors, the most significant of which are typically the financial performance of the acquired business and the risk-adjusted discount rate for the fair value measurement. 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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-07233

STANDEX INTERNATIONAL CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

31-0596149

(State of incorporation)

(IRS Employer Identification No.)

23 Keewaydin drive, Salem, New Hampshire	03079
(Address of principal executive offices)	(Zip Code)

(603) 893-9701

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, Par Value $1.50 Per Share	SXI	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒			Accelerated filer ☐
Non-accelerated filer ☐			Smaller reporting company ☐
			Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of Registrant's Common Stock outstanding on January 27, 2026 was 12,118,733.

STANDEX INTERNATIONAL CORPORATION

INDEX

		Page No.
PART I. FINANCIAL INFORMATION:

Item 1.

	Condensed Consolidated Balance Sheets as of December 31, 2025 and June 30, 2025 (unaudited)	3

	Condensed Consolidated Statements of Operations for the three and six months ended December 31, 2025 and 2024 (unaudited)	4

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended December 31, 2025 and 2024 (unaudited)	5

	Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended December 31, 2025 and 2024 (unaudited)	6

	Condensed Consolidated Statements of Cash Flows for the six months ended December 31, 2025 and 2024 (unaudited)	8

	Notes to Unaudited Condensed Consolidated Financial Statements	9

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	24

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	31

Item 4.	Controls and Procedures	31

PART II. OTHER INFORMATION:

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32

Item 5.	Other Information	32

Item 6.	Exhibits	33

PART I. FINANCIAL INFORMATION

ITEM 1

STANDEX INTERNATIONAL CORPORATION AND SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)	*December 31, 2025*			*June 30, 2025*
ASSETS
Current assets:
Cash and cash equivalents	$	96,998		$	104,542
Accounts receivable, less allowance for credit losses of $4,051 and $3,985 at December 31, 2025 and June 30, 2025, respectively		176,628			172,702
Inventories		131,196			129,994
Contract assets		62,874			59,228
Prepaid expenses and other current assets		23,038			14,413
Total current assets		490,734			480,879

Property, plant, and equipment, net		160,378			160,364
Intangible assets, net		212,052			225,757
Goodwill		594,080			610,338
Deferred tax asset		11,687			11,971
Operating lease right-of-use asset		47,835			47,998
Other non-current assets		37,735			29,573
Total non-current assets		1,063,767			1,086,001

Total assets	$	1,554,501		$	1,566,880

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	87,773		$	88,001
Accrued liabilities		69,403			63,204
Income taxes payable		13,633			15,770
Total current liabilities		170,809			166,975

Long-term debt		534,733			552,515
Operating lease long-term liabilities		37,997			40,057
Accrued pension and other non-current liabilities		66,215			67,743
Total non-current liabilities		638,945			660,315

Contingencies (Note 15)

Redeemable noncontrolling interest		44,511			27,913

Stockholders' equity:
Common stock, par value $1.50 per share, 60,000,000 shares authorized, 27,984,278 shares issued, 12,047,561 and 11,992,116 shares outstanding at December 31, 2025 and June 30, 2025		41,976			41,976
Additional paid-in capital		140,476			136,082
Retained earnings		1,136,096			1,126,851
Accumulated other comprehensive loss		(188,019	)		(164,765	)
Treasury shares: 15,936,717 and 15,992,162 shares at December 31, 2025 and June 30, 2025		(430,293	)		(428,467	)
Total stockholders' equity		700,236			711,677

Total liabilities and stockholders' equity	$	1,554,501		$	1,566,880

See notes to unaudited condensed consolidated financial statements

STANDEX INTERNATIONAL CORPORATION AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations

	*Three Months Ended December 31,*					*Six Months Ended December 31,*
(In thousands, except per share data)	*2025*		*2024*			*2025*		*2024*
Net sales	$	221,320	$	189,814		$	438,751	$	360,278
Cost of sales		129,087		118,367			256,086		218,758
Gross profit		92,233		71,447			182,665		141,520
Selling, general, and administrative expenses		55,605		45,664			109,974		88,712
Restructuring costs		438		920			6,436		2,006
Acquisition related costs		617		16,400			1,049		18,240
Total operating expenses		56,660		62,984			117,459		108,958
Income from operations		35,573		8,463			65,206		32,562
Interest expense		7,914		5,575			16,826		6,552
Other non-operating expense, net		490		890			225		862
Income from continuing operations before income taxes		27,169		1,998			48,155		25,148
Provision for income taxes		6,536		710			11,701		5,672
Income from continuing operations		20,633		1,288			36,454		19,476
Income (Loss) from discontinued operations, net of tax		48		(13	)		21		(4	)
Net income		20,681		1,275			36,475		19,472
Less: net income attributable to redeemable noncontrolling interest		18,561		418			19,300		418
Net income attributable to common stockholders		2,120		857			17,175		19,054

Basic earnings per share attributable to Standex International Corporation shareholders:
Continuing operations		0.17		0.07			1.43	$	1.60
Discontinued operations		0.00		-			0.00		-
Total		0.17	$	0.07		$	1.43	$	1.60

Diluted earnings per share attributable to Standex International Corporation shareholders:
Continuing operations		0.17		0.07			1.42	$	1.59
Discontinued operations		0.00		-			0.00		-
Total		0.17	$	0.07		$	1.42	$	1.59

Weighted average number of shares:
Basic		12,043		11,942			12,027		11,872
Diluted		12,055		12,025			12,073		11,972

See notes to unaudited condensed consolidated financial statements

STANDEX INTERNATIONAL CORPORATION AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)

	*Three Months Ended December 31,*						*Six Months Ended December 31,*
(In thousands)	*2025*			*2024*			*2025*			*2024*
Net income	$	20,681		$	1,275		$	36,475		$	19,472
Other comprehensive income (loss):
Defined benefit pension plans:
Actuarial (losses) gains and other changes in unrecognized costs, net of tax		(22	)		266		$	57		$	48
Amortization of unrecognized costs, net of tax		898			798			1,797			1,597
Derivative instruments:
Change in unrealized gains (losses), net of tax		195			137			(588	)		(154	)
Amortization of unrealized losses into interest expense, net of tax		(227	)		(1,101	)		(346	)		(2,385	)
Foreign currency translation losses, net of tax		(10,004	)		(27,447	)		(25,278	)		(4,436	)
Other comprehensive loss		(9,160	)		(27,347	)		(24,358	)		(5,330	)

Total comprehensive income (loss)		11,521			(26,072	)		12,117			14,142
Less: comprehensive income (loss) attributable to redeemable noncontrolling interest		18,235			(99	)		18,196			(99	)
Total comprehensive income (loss) attributable to Standex International Corporation	$	(6,714	)	$	(25,973	)	$	(6,079	)	$	14,241

See notes to unaudited condensed consolidated financial statements

STANDEX INTERNATIONAL CORPORATION AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Stockholders' Equity


For the three month period ended	*Redeemable*					*Additional*						*Accumulated Other*									*Total*
December 31, 2025	*Noncontrolling*			*Common*		*Paid-in*			*Retained*			*Comprehensive*			*Treasury Stock*						*Stockholders'*
(in thousands, except as specified)	*Interest*			*Stock*		*Capital*			*Earnings*			*Income (Loss)*			*Shares*			*Amount*			*Equity*
Balance, September 30, 2025	$	27,149		$	41,976	$	137,415		$	1,138,071		$	(179,185	)		15,951		$	(430,618	)	$	707,659
Stock issued under incentive compensation plans and employee purchase plans and business acquisitions		-			-		(4	)		-			-			(14	)		391			387
Stock-based compensation		-			-		3,065			-			-			-			-			3,065
Treasury stock acquired		-			-		-			-			-			-			(66	)		(66	)
Comprehensive income:		-			-		-			-			-			-			-			-
Net income		18,561			-		-			2,120			-			-			-			2,120
Foreign currency translation adjustment		(326	)		-		-			-			(9,678	)		-			-			(9,678	)
Pension, net of tax of $0.3 million		-			-		-			-			876			-			-			876
Change in fair value of derivatives, net of tax of $0.0 million		-			-		-			-			(32	)		-			-			(32	)
Distributions to noncontrolling interests		(873	)		-		-			-			-			-			-			-
Dividends declared ($0.34 per share)		-			-		-			(4,095	)		-			-			-			(4,095	)
Balance, December 31, 2025	$	44,511		$	41,976	$	140,476		$	1,136,096		$	(188,019	)		15,937		$	(430,293	)	$	700,236


For the three month period ended December 31, 2024	*Redeemable*					*Additional*						*Accumulated Other*									*Total*
	*Noncontrolling*			*Common*		*Paid-in*			*Retained*			*Comprehensive*			*Treasury Stock*						*Stockholders'*
(in thousands, except as specified)	*Interest*			*Stock*		*Capital*			*Earnings*			*Income (Loss)*			*Shares*			*Amount*			*Equity*
Balance, September 30, 2024	$	-		$	41,976	$	108,383		$	1,100,924		$	(160,939	)		16,171		$	(432,323	)	$	658,021
Stock issued under incentive compensation plans and employee purchase plans		-			-		(525	)		-			-			(25	)		679			154
Stock issued for business acquisition							21,882			-			-			(152	)		4,071			25,953
Fair value of noncontrolling interest at acquisition		26,734					-			-												-
Stock-based compensation		-			-		2,587			-			-			-			-			2,587
Treasury stock acquired		-			-								-			4			(784	)		(784	)
Comprehensive income:
Net income		418			-		-			857			-			-			-			857
Foreign currency translation adjustment		(517	)		-		-			-			(26,930	)		-			-			(26,930	)
Pension, net of tax of $0.3 million		-			-		-			-			1,064			-			-			1,064
Change in fair value of derivatives, net of tax of $0.3 million		-			-		-			-			(964	)		-			-			(964	)
Dividends declared ($0.32 per share)		-			-		-			(3,924	)		-			-			-			(3,924	)
Balance, December 31, 2024	$	26,635		$	41,976	$	132,327		$	1,097,857		$	(187,769	)		15,998		$	(428,357	)	$	656,034

See notes to unaudited condensed consolidated financial statements

STANDEX INTERNATIONAL CORPORATION AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Stockholders' Equity

For the six month period ended	*Redeemable*					*Additional*						*Accumulated Other*									*Total*
December 31, 2025	*Noncontrolling*			*Common*		*Paid-in*			*Retained*			*Comprehensive*			*Treasury Stock*						*Stockholders'*
(in thousands, except as specified)	*Interest*			*Stock*		*Capital*			*Earnings*			*Income (Loss)*			*Shares*			*Amount*			*Equity*
Balance, June 30, 2025	$	27,913		$	41,976	$	136,082		$	1,126,851		$	(164,765	)		15,992		$	(428,467	)	$	711,677
Stock issued under incentive compensation plans and employee purchase plans		-			-		(444	)		-			-			(73	)		1,972			1,528
Stock-based compensation		-			-		4,838			-			-			-			-			4,838
Treasury stock acquired		-			-		-			-			-			18			(3,798	)		(3,798	)
Comprehensive income:							-			-						-			-			-
Net Income		19,300			-		-			17,175			-			-			-			17,175
Foreign currency translation adjustment		(1,104	)		-		-			-			(24,174	)		-			-			(24,174	)
Pension, net of tax of $0.6 million		-			-		-			-			1,854			-			-			1,854
Change in fair value of derivatives, net of tax of $0.3 million		-			-		-			-			(934	)		-			-			(934	)
Distributions to noncontrolling interests		(1,598	)		-		-			-			-			-			-			-
Dividends declared ($0.66 per share)		-			-		-			(7,930	)		-			-			-			(7,930	)
Balance, December 31, 2025	$	44,511		$	41,976	$	140,476		$	1,136,096		$	(188,019	)		15,937		$	(430,293	)	$	700,236

For the six month period ended December 31, 2024	*Redeemable*					*Additional*						*Accumulated Other*									*Total*
	*Noncontrolling*			*Common*		*Paid-in*			*Retained*			*Comprehensive*			*Treasury Stock*						*Stockholders'*
(in thousands, except as specified)	*Interest*			*Stock*		*Capital*			*Earnings*			*Income (Loss)*			*Shares*			*Amount*			*Equity*
Balance, June 30, 2024	$	-		$	41,976	$	106,193		$	1,086,277		$	(182,956	)		16,222		$	(429,987	)	$	621,503
Stock issued under incentive compensation plans and employee purchase plans		-			-		(903	)		-			-			(101	)		2,693			1,790
Stock issued for business acquisition		-			-		21,882			-			-			(152	)		4,071			25,953
Fair value of noncontrolling interest at acquisition		26,734			-		-			-			-			-			-			-
Stock-based compensation		-			-		5,155			-			-			-			-			5,155
Treasury stock acquired		-			-		-			-			-			29			(5,134	)		(5,134	)
Comprehensive income:
Net income		418			-		-			19,054			-			-			-			19,054
Foreign currency translation adjustment		(517	)		-		-			-			(3,919	)		-			-			(3,919	)
Pension, net of tax of $0.5 million		-			-		-			-			1,645			-			-			1,645
Change in fair value of derivatives, net of tax of $0.8 million		-			-		-			-			(2,539	)		-			-			(2,539	)
Dividends declared ($0.62 per share)		-			-		-			(7,474	)		-			-			-			(7,474	)
Balance, December 31, 2024	$	26,635		$	41,976	$	132,327		$	1,097,857		$	(187,769	)		15,998		$	(428,357	)	$	656,034

See notes to unaudited condensed consolidated financial statements

STANDEX INTERNATIONAL CORPORATION AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Cash Flows

	*Six Months Ended December 31,*
(In thousands)	*2025*			*2024*
Cash flows from operating activities
Net income	$	36,475		$	19,472
Income (loss) from discontinued operations		21			(4	)
Income from continuing operations		36,454			19,476
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		19,801			15,566
Stock-based compensation		4,838			5,155
Non-cash portion of restructuring charge		149			(896	)
Contributions to defined benefit plans		(2,796	)		(4,766	)
Changes in operating assets and liabilities, net		(20,935	)		(7,873	)
Net cash provided by operating activities - continuing operations		37,511			26,662
Net cash used in operating activities - discontinued operations		(127	)		(31	)
Net cash provided by operating activities		37,384			26,631
Cash flows from investing activities
Expenditures for property, plant, and equipment		(14,084	)		(13,690	)
Expenditures for acquisitions, net of cash acquired		-			(419,652	)
Other investing activity		(5	)		3,904
Net cash used in investing activities		(14,089	)		(429,438	)
Cash flows from financing activities
Proceeds from borrowings		8,000			724,313
Payments of debt		(26,000	)		(339,110	)
Contingent consideration payment		(330	)		-
Activity under share-based payment plans		1,528			1,792
Purchases of treasury stock and other		(3,798	)		(9,582	)
Distributions to non-controlling interests		(1,598	)		-
Cash dividends paid		(7,930	)		(7,362	)
Net cash (used in) provided by financing activities		(30,128	)		370,051
Effect of exchange rate changes on cash and cash equivalents		(711	)		(300	)
Net change in cash and cash equivalents		(7,544	)		(33,056	)
Cash and cash equivalents at beginning of year		104,542			154,203
Cash and cash equivalents at end of period	$	96,998		$	121,147

Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest	$	16,627		$	3,555
Income taxes, net of refunds	$	15,946		$	6,245
Stock issued for business acquisition	$	-		$	25,953

See notes to unaudited condensed consolidated financial statements

STANDEX INTERNATIONAL CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

1) Management Statement

Standex International Corporation (“Standex” or the “Company”) is a diversified industrial manufacturer in five broad business segments: Electronics, Engineering Technologies, Scientific, Engraving and Specialty Solutions with operations in the United States, Europe, Canada, Japan, Singapore, Mexico, Turkey, India, and China. The accompanying consolidated financial statements include the accounts of Standex International Corporation and its subsidiaries and are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany accounts and transactions have been eliminated in consolidation. Noncontrolling interests in subsidiaries related to Standex’ ownership interests of less than 100% are reported as Noncontrolling interests in the consolidated balance sheets. The results of noncontrolling ownership interests held by Standex are reported as Net income attributable to redeemable noncontrolling interests in the consolidated statements of operations.

The Company considers events or transactions that occur after the balance sheet date, but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. The Company evaluated subsequent events through the date and time our consolidated financial statements were issued.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly the results of operations for the three and six months ended December 31, 2025 and 2024, the cash flows for the six months ended December 31, 2025 and 2024 and the financial position of Standex International Corporation (“Standex”, the “Company”, “we”, “us”, or “our”), at December 31, 2025. The interim results are not necessarily indicative of results for a full year. The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. The unaudited condensed consolidated financial statements and notes do not contain information which would substantially duplicate the disclosures contained in the audited annual consolidated financial statements and notes for the year ended June 30, 2025. The condensed consolidated balance sheet at June 30, 2025 presented herein was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. The financial statements contained herein should be read in conjunction with the Annual Report on Form 10-K and in particular the audited consolidated financial statements for the year ended June 30, 2025. Unless otherwise noted, references to years are to the Company’s fiscal years. Currently the fiscal year end is June 30. For further clarity, the Company's fiscal year 2026 includes the twelve-month period from July 1, 2025 to June 30, 2026.

The preparation of consolidated financial statements in conformity with GAAP requires the use of estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of the financial statements and for the period then ended. Estimates are based on historical experience, actuarial estimates, current conditions and various other assumptions that are believed to be reasonable under the circumstances. These estimates form the basis for making judgments about the carrying values of assets and liabilities when they are not readily apparent from other sources. These estimates assist in the identification and assessment of the accounting treatment necessary with respect to commitments and contingencies. Actual results may differ from these estimates under different assumptions or conditions. The estimates and assumptions used in the preparation of the consolidated financial statements have considered the implications on the Company as a result of ongoing global events and related economic impacts. As a result, there is heightened volatility and uncertainty around tariff actions, supply chain performance, labor availability, and customer demand. However, the magnitude of such impact on the Company’s business and its duration is uncertain. The Company is not aware of any specific event or circumstance that would require an update to its estimates or adjustments to the carrying value of its assets and liabilities as of December 31, 2025 and the issuance date of the quarterly report on Form 10-Q.

Research and development expenditures are expensed as incurred. Total research and development costs, which are classified under selling, general, and administrative expenses were $6.3 million and $5.3 million for the three months ended December 31, 2025 and 2024, respectively. Total research and development costs were $12.5 million and $10.2 million for the six months ended December 31, 2025 and 2024, respectively.

Recently Issued Accounting Pronouncements

The Organization for Economic Co-operation and Development (OECD) and the G20 Inclusive Framework on Base Erosion and Profit Shifting (the "Inclusive Framework") have put forth Pillar Two proposals that ensure a minimal level of taxation. Several countries in which the Company operates, including several European Union member states, have adopted domestic legislation to implement the Inclusive Framework's global corporate minimum tax rate of fifteen percent. This legislation became effective for the Company beginning in the fiscal year 2025. Based on the Company's analysis of Pillar Two provisions, these tax law changes did not have a material impact on the Company's financial statements for the fiscal year 2026.

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that the Company adopts as of the specified effective date. Unless otherwise discussed below, the Company does not believe that the adoption of recently issued standards had or may have a material impact on its unaudited condensed consolidated financial statements or disclosures.

In December 2023, the FASB issued ASU 2023- 09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures. This ASU is expected to enhance the transparency and decision usefulness of income tax disclosures by requiring public business entities on an annual basis to disclose specific categories in the rate reconciliation, additional information for reconciling items that meet a quantitative threshold, and certain information about income taxes paid. This ASU is effective for fiscal years beginning after December 15, 2024. The amendments in this ASU are required to be applied on a prospective basis and retrospective adoption is permitted. Based on the Company's current analysis, the Company does not expect these changes to have a material impact on the Company's financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income (Topic 220): Expense Disaggregation Disclosures. Additionally, in January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. This ASU provides guidance to expand disclosures related to the disaggregation of income statement expenses. This ASU also requires, in the notes to the financial statements, disclosure of specified information about certain costs and expenses which includes purchases of inventory, employee compensation, depreciation, and intangible asset amortization included in each relevant expense caption. ASU 2025-01 is effective for fiscal years beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, on a retrospective or prospective basis, with early adoption permitted. This ASU will be effective for the Company’s Form 10-K for fiscal 2028 and Form 10-Q filed thereafter. The Company is currently evaluating the impact this ASU may have on its financial statement disclosures.

In July 2025, the U.S. government enacted The One Big Beautiful Bill Act of 2025 which includes, among other provisions, changes to the U.S. corporate income tax system including the allowance of immediate expensing of qualifying research and development expenses and permanent extensions of certain provisions within the Tax Cuts and Jobs Act. Certain provisions were effective for Standex beginning June 1, 2025. Based on the Company's current analysis of the provisions, the Company does not expect these tax law changes to have a material impact on the Company's financial statements. The Company will continue to evaluate the impact of these provisions throughout the remainder of the year.

In July 2025, the FASB issued ASU 2025- 05, Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient for measuring expected credit losses on current trade receivables and contract assets by assuming that current conditions remain unchanged over the life of the asset. The amendments are effective for annual and interim periods beginning after December 15, 2025, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

In September 2025, the FASB issued ASU 2025- 06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350- 40): Targeted Improvements to the Accounting for Internal-Use Software related to accounting for internal-use software costs. The amendments in this update improve the operability of the guidance by removing all references to software development project stages so that the guidance is neutral to different software development methods. This update is effective for annual periods beginning after December 15, 2027, including interim periods within those fiscal years, though early adoption is permitted. The Company is currently in the process of evaluating the effects of this pronouncement on its consolidated financial statements.

In November 2025, the FASB issued ASU 2025- 09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements. This ASU introduces five targeted improvements to better align hedge accounting with entities’ risk management activities. This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within those annual reporting periods, with early adoption permitted. The amendments in this ASU are required to be applied on a prospective basis for all hedging relationships. The Company is currently evaluating the impact this ASU may have on its financial statement disclosures.

2) Acquisitions

McStarlite

On February 5, 2025, the Company acquired 100% of the issued and outstanding shares of Basmat Inc., dba McStarlite, a privately held company, for $57.0 million, net of cash acquired. McStarlite is a leading provider of complex sheet metal aerospace components. It designs and manufactures cold deep draw and bulge-formed aviation components, including segmented and single piece lipskins, nozzles, complex sheet metal assemblies, and tooling to support production hardware. McStarlite's results are reported within the Company's Engineering Technologies segment.

The purchase price was allocated to the net tangible and identifiable intangible assets acquired and liabilities assumed based on a valuation of their fair values on the closing date. Goodwill recorded from this transaction is attributable to McStarlite's technical and applications expertise, which is highly complementary to the Company's existing business.

Identifiable intangible assets of $24.5 million consist primarily of $19.7 million for customer relationships to be amortized over 12 years and $4.8 million for indefinite lived tradenames. The goodwill of $16.2 million created by the transaction is not deductible for income tax purposes. The accounting for business combinations requires estimates and judgments regarding expectations for future cash flows of the acquired business, and the allocations of those cash flows to identifiable tangible and intangible assets, in determining the assets acquired and liabilities assumed. The fair values assigned to tangible and intangible assets acquired and liabilities assumed are based on management's best estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques.

During the six months ended December 31, 2025, the Company made the following changes to the purchase price allocation of McStarlite as mentioned below (in thousands):

	*Preliminary Allocation as of June 30, 2025*			*Adjustments*			*Preliminary Allocation as of December 31, 2025*
Total purchase consideration:
Cash payments	$	57,549		$	-		$	57,549
Less: cash acquired		(586	)		-			(586	)
Total	$	56,963		$	-		$	56,963

Identifiable assets acquired and liabilities assumed:
Other acquired assets	$	8,808		$	-		$	8,808
Inventories		6,744			-			6,744
Customer backlog		3,970			-			3,970
Property, plant, and equipment		8,603			-			8,603
Identifiable intangible assets		24,500			-			24,500
Goodwill		16,761			(554	)		16,207
Liabilities assumed		(12,423	)		554			(11,869	)
Total	$	56,963		$	-		$	56,963

There were no changes to the purchase price allocations of any other acquisitions during the six months ended December 31, 2025.

Amran/Narayan Group

On October 28, 2024 (“Closing Date”), the Company acquired, in separate transactions, 100% of the outstanding membership interest in Amran LLC (“Amran”), a privately-held company based in Houston, Texas, pursuant to a Securities Purchase Agreement (the “Amran Purchase Agreement”) and through its wholly owned subsidiary, Mold-Tech Singapore PTE LTD (“Mold-Tech Singapore”), 90.1% of the capital stock of Narayan Powertech Private Limited (“Narayan”), a privately-held India-based company, pursuant to a Securities Purchase Agreement (the “Narayan Purchase Agreement”) (collectively the “Amran/Narayan Group”). With manufacturing locations in the United States and India, Amran/Narayan Group is a leading manufacturer of low voltage and medium voltage instrument transformers. Its custom product portfolio is specifically designed and developed in partnership with OEMs for their specific equipment related to electrical grid applications. This acquisition continues the Company's portfolio strategy of focusing its higher-margin business segments in faster-growing markets. Amran/Narayan Group results are reported within the Company's Electronics segment.

Total consideration for Amran aggregated $179.7 million consisting of $153.7 million in cash consideration and 152,299 shares of Standex common stock, issued out of the Company's treasury shares, with a fair value of $26.0 million. The fair value of Standex common stock issued as part of the consideration for Amran was determined on the basis of the closing market price of our common shares on the Closing Date. The total consideration for the 90.1% interest in Narayan consisted of a cash payment of $261.9 million. The Company entered into a Shareholder Agreement that provides the Company with the right to purchase, and the noncontrolling interest holders with the right to sell, their remaining minority interest at a contractually defined redemption value. As the redemptions are contingently redeemable at the option of the noncontrolling interest shareholders, the Company classifies the redeemable noncontrolling interest in the mezzanine equity section on the consolidated balance sheets, which is presented above the equity section and below liabilities. The repurchase price of the redeemable noncontrolling interests is the greater of the share price paid for similar shares as part of the Amran/Narayan Acquisition or 12 times twelve months' trailing EBITDA. The redeemable noncontrolling interest represents the minority shareholder's interest. Subject to receipt of regulatory approval from the Reserve Bank of India (“RBI”), Mold-Tech Singapore will acquire the remaining 9.9% of the capital stock of Narayan in a second closing for shares of Standex common stock with a fair value of $26.7 million ("Share Swap Provision").

Additionally, on October 28, 2024, as contemplated by the Narayan Purchase Agreement, the Company, Mold-Tech Singapore and the owners of the remaining 9.9% ownership interest in Narayan, which was not acquired by the Company, entered into a Shareholders’ Agreement. The Shareholders’ Agreement provides the noncontrolling interest holders with certain put rights upon the expiration of the Share Swap Provision. The noncontrolling interest holders will have the right (but not an obligation) to transfer up to their remaining interest in Narayan for a period of three years ("Put Option Period") to Mold-Tech Singapore. Subsequent to the expiration of the Put Option Period, Mold-Tech Singapore will have the right (but not an obligation) to acquire the remaining interest in Narayan for an additional three year consecutive period.

The purchase price was allocated to the net tangible and identifiable intangible assets acquired and liabilities assumed and noncontrolling interest based on a valuation of their fair values on the Closing Date. Goodwill recorded from this transaction is attributable to Amran/Narayan Group’s technical and applications expertise, which is highly complementary to the Company's existing business.

Identifiable intangible assets of $136.0 million consist primarily of $28.7 million for indefinite lived tradenames and $107.3 million of customer relationships to be amortized over 12 years. Goodwill of $298.4 was recognized. Goodwill related to the Amran (U.S.) acquisition is deductible for U.S. income tax purposes; the goodwill related to the Narayan (India) acquisition is not deductible. The accounting for business combinations requires estimates and judgments regarding expectations for future cash flows of the acquired business, and the allocations of those cash flows to identifiable tangible and intangible assets, in determining the assets acquired and liabilities assumed. The fair values assigned to tangible and intangible assets acquired and liabilities assumed are based on management's best estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. The fair value of the noncontrolling interest in Narayan was determined based on the consideration expected to be transferred by the Company for its controlling ownership interest based on the Standex share price at the Closing Date.

The following table summarizes the allocation of the aggregate total consideration for the Amran/Narayan Group to the estimated fair values of the tangible and identifiable intangible assets acquired and liabilities and noncontrolling interest assumed (in thousands):

	*Final Allocation as of September 30, 2025*
Fair value of business combination:
Total cash consideration	$	415,604
Less: cash acquired		(7,114	)
Stock consideration		25,953
Total	$	434,443


Identifiable assets acquired and liabilities assumed:
Other acquired assets	$	11,799
Accounts receivable		25,863
Inventories		13,677
Customer backlog		10,100
Property, plant, and equipment		2,816
Identifiable intangible assets		136,000
Goodwill		298,383
Deferred tax liabilities, net		(19,990	)
Other liabilities assumed		(17,471	)
Total identifiable assets acquired and liabilities assumed		461,177

Redeemable noncontrolling interest (see Note 18)		(26,734	)

Total identifiable assets, liabilities and redeemable noncontrolling interest	$	434,443

The following table reflects the unaudited pro forma operating results of the Company for the three and six months ended December 31, 2024, which give effect to the acquisition of the Amran/Narayan Group as if it had occurred effective July 1, 2023. The pro forma results are not necessarily indicative of the operating results that would have occurred had the acquisition been effective as of the date indicated, nor are they intended to be indicative of results that may occur in the future. The pro forma information does not include the effects of any synergies related to the Amran/Narayan Group acquisition, transactions between the entities prior to acquisition, or the pre-acquisition impact of other businesses acquired by the Company during this period as they were not material to the Company’s historical results of operations.

	*Three Months Ended*		*Six Months Ended*
(in thousands)	*December 31, 2024*
Net sales	$	199,035	$	396,721
Net income		16,220		43,943

Pro forma earnings during the periods presented were adjusted to include the following adjustments:

	●	Amortization of inventory step-up to fair value assuming inventory turns within a two-month period;
	●	Amortization of definite-lived intangible assets recognized at fair value that exceed one year as if acquired July 1, 2023;
	●	Non-recurring acquisition-related costs have been excluded from net income;
	●	Interest expense (including amortization of loan discount) on the Term Loan Credit Agreement entered into in connection with the acquisition as if the loan was obtained July 1, 2023. The interest rate assumed for purposes of the pro forma financial information was 7.7% on average as the rate in agreement is a variable rate plus certain margins; and
	●	Income tax expense (benefit) was adjusted related to the above pro forma adjustments using an estimated tax rate of 22.6%.

With respect to each of the McStarlite and Amran/Narayan Group acquisitions, the estimated fair values of the indefinite lived tradenames were determined based on an income approach using the relief from royalty method, which assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to exploit the related benefits of the tradenames assets. The cash flow projections the Company uses to estimate the fair value of the tradenames intangible assets involve several assumptions, including projected revenue growth, an estimated royalty rate, after-tax royalty savings expected from ownership of the tradenames, and a discount rate used to derive the estimated fair value of the tradenames. The estimated fair value of the customer relationships intangible assets were determined based on the income approach using the multi-period excess earnings method, which measures the economic benefit indirectly by calculating the income attributable to an asset after appropriate returns are paid to complementary assets used in conjunction with the subject asset to produce the earnings associated with the subject asset, commonly referred to as contributory asset charges. The fair value determination of the customer relationships intangible asset required the Company to make significant estimates and assumptions related to future cash flows and the selection of an appropriate discount rate to apply to future cash flows.

Acquisition Related Costs

Acquisition related costs include costs related to acquired businesses and other pending acquisitions. These costs consist of (i) deferred compensation arrangements and (ii) acquisition related professional service fees and expenses, including financial advisory, legal, accounting, and other outside services incurred in connection with integration and acquisition activities, and regulatory matters related to acquired entities. These costs do not include purchase accounting expenses, which the Company defines as acquired backlog and the step-up of inventory to fair value, or the amortization of the acquired intangible assets.

Acquisition related costs for the three months ended December 31, 2025 and 2024 were $0.6 million and $16.4 million, respectively. Acquisition related costs for the six months ended December 31, 2025 and 2024 were $1.0 million and $18.2 million, respectively.

3) Revenue From Contracts With Customers

Most of the Company’s contracts have a single performance obligation which represents the product or service being sold to the customer. Some contracts include multiple performance obligations such as a product and the related installation and/or extended warranty. Additionally, most of the Company’s contracts offer assurance type warranties in connection with the sale of a product to customers. Assurance type warranties provide a customer with assurance that the product complies with agreed-upon specifications. Assurance type warranties do not represent a separate performance obligation.

In general, the Company recognizes revenue at the point in time control transfers to its customer based on predetermined shipping terms. Revenue is recognized over time under certain long-term contracts within the Engineering Technologies and Engraving segments for highly customized customer products that have no alternative use and in which the contract specifies the Company has a right to payment for its costs, plus a reasonable margin. For these products, the transfer of control is measured pro rata, based upon current estimates of costs to complete such contracts. Losses on contracts are fully recognized in the period in which the losses become determinable. Revisions in profit estimates are reflected on a cumulative basis in the period in which the basis for such revision becomes known.

Disaggregation of Revenue from Contracts with Customers

The following table presents revenue from continuing operations disaggregated by product line and segment (in thousands):

	*Three Months Ended*				*Six Months Ended*
Revenue by Product Line	*December 31, 2025*		*December 31, 2024*		*December 31, 2025*		*December 31, 2024*

Electronics	$	115,668	$	95,923	$	226,220	$	173,656

Engineering Technologies		30,636		22,649		60,530		43,179

Scientific		19,502		18,477		38,952		36,170

Engraving Services		32,990		28,844		65,611		58,664
Engraving Products		2,738		2,610		5,957		6,153
Total Engraving		35,728		31,454		71,568		64,817

Hydraulics Cylinders and Systems		11,393		12,067		23,566		23,689
Merchandising & Display		8,393		9,244		17,915		18,767
Total Specialty Solutions		19,786		21,311		41,481		42,456

Total revenue by product line	$	221,320	$	189,814	$	438,751	$	360,278

The following table presents revenue from continuing operations disaggregated by geography based on the Company’s locations (in thousands):

	*Three Months Ended*		*Three Months Ended*		*Six Months Ended*		*Six Months Ended*
Net sales	*December 31, 2025*		*December 31, 2024*		*December 31, 2025*		*December 31, 2024*
United States	$	128,646	$	111,532	$	254,976	$	212,268
Asia Pacific		58,338		49,706		114,721		87,401
EMEA (1)		32,033		26,368		64,667		55,638
Other Americas		2,303		2,208		4,387		4,971
Total	$	221,320	$	189,814	$	438,751	$	360,278

_⁽¹⁾ EMEA consists primarily of Europe, Middle East and S. Africa.

The following table presents revenue from continuing operations disaggregated by timing of recognition (in thousands):

	*Three Months Ended*				*Six Months Ended*
Timing of Revenue Recognition	*December 31, 2025*		*December 31, 2024*		*December 31, 2025*		*December 31, 2024*
Products and services transferred at a point in time	$	200,084	$	169,034	$	397,064	$	321,721
Products transferred over time		21,236		20,780		41,687		38,557
Net sales	$	221,320	$	189,814	$	438,751	$	360,278

Contract Balances

Contract assets represent revenue recognized related to work completed but not yet billed as of the reporting date. Contract liabilities are customer deposits for which revenue has not been recognized. Current contract liabilities are recorded as accrued liabilities.

The timing of revenue recognition, invoicing and cash collections results in billed receivables, contract assets and contract liabilities on the consolidated balance sheets. When consideration is received from a customer prior to transferring goods or services to the customer under the terms of a contract, a contract liability is recorded. Contract liabilities are recognized as revenue after control of the goods and services are transferred to the customer and all revenue recognition criteria have been met.

The following table provides information about contract assets and liability balances (in thousands):

	June 30, 2025		Additions		Deductions		December 31, 2025
Six months ended December 31, 2025
Contract assets	$	59,228	$	41,687	$	38,041	$	62,874
Contract liabilities:
Customer deposits		5,189		7,745		2,214		10,720

	*June 30, 2024*		*Additions*		*Deductions*		*December 31, 2024*
Six months ended December 31, 2024
Contract assets	$	45,393	$	36,004	$	25,798	$	55,599
Contract liabilities:
Customer deposits		1,766		1,805		2,377		1,194

We recognized the following revenue which was included in the contract liability beginning balances (in thousands):

	*Three months ended*
Revenue recognized in the period from:	*December 31, 2025*		*December 31, 2024*
Amounts included in the contract liability balance at the beginning of the period	$	768	$	-

	*Six months ended*
Revenue recognized in the period from:	*December 31, 2025*		*December 31, 2024*
Amounts included in the contract liability balance at the beginning of the period	$	768	$	1,766

4) Fair Value Measurements

The financial instruments shown below are presented at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models may be applied.

Assets and liabilities recorded at fair value in the consolidated balance sheet are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Hierarchical levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities and the methodologies used in valuation are as follows:

Level 1 – Quoted prices (unadjusted) in active markets for identical assets and liabilities. The Company’s deferred compensation plan assets consist of shares in various mutual funds (investments are participant-directed) which invest in a broad portfolio of debt and equity securities. These assets are valued based on publicly quoted market prices for the funds’ shares as of the balance sheet dates.

Level 2 – Inputs, other than quoted prices in an active market, that are observable either directly or indirectly through correlation with market data. For foreign exchange forward contracts and interest rate swaps, the Company values the instruments based on the market price of instruments with similar terms, which are based on spot and forward rates as of the balance sheet dates. The Company has considered the creditworthiness of counterparties in valuing all assets and liabilities.

Level 3 – Unobservable inputs based upon the Company’s best estimate of what market participants would use in pricing the asset or liability.

There were no transfers of assets or liabilities between any levels of the fair value measurement hierarchy at December 31, 2025 or June 30, 2025. The Company’s policy is to recognize transfers between levels as of the date they occur.

Cash and cash equivalents, accounts receivable, accounts payable, and debt are carried at cost, which approximates fair value.

The fair values of financial instruments were as follows (in thousands):

	*December 31, 2025*
	*Total*		*Level 1*		*Level 2*		*Level 3*
Assets
Marketable securities - deferred compensation plan	$	5,954	$	5,954	$	-	$	-

Liabilities
Interest rate swaps	$	1,689	$	-	$	1,689	$	-
Foreign exchange contracts		1,223		-		1,223		-
Contingent consideration (a)		330		-		-		330

	*June 30, 2025*
	*Total*		*Level 1*		*Level 2*		*Level 3*
Assets
Marketable securities - deferred compensation plan	$	4,980	$	4,980	$	-	$	-
Debt securities		3,629		-		-		3,629
Equity securities		2,211		-		-		2,211

Liabilities
Foreign exchange contracts	$	68		-	$	68	$	-
Contingent consideration (a)		660		-		-		660

^(a) The Company’s financial liabilities based upon Level 3 inputs comprise of contingent consideration arrangement relating to its acquisition of SEPL in the event that certain financial targets are achieved during the two years following its acquisition in the fourth quarter of fiscal year 2024. The Company has determined the fair value of the liabilities for the contingent consideration based on an evaluation of the probability and amount of any deferred compensation that has been earned to date. This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement within the fair value hierarchy. The fair value of the contingent consideration liability associated with future payments was based on several factors, the most significant of which are typically the financial performance of the acquired business and the risk-adjusted discount rate for the fair value measurement. During the six months ended December 31, 2025, the reduction in the fair value of the contingent consideration liability was a result of the Company’s payment of $0.3 million pursuant to the SEPL agreement.

The Company invested $2.0 million for equity securities of a company whose securities are not publicly traded and where fair value is not readily available. This was recorded as investments within other non-current assets in the consolidated balance sheets to reflect the initial fair value of the stock acquired. These investments are recorded using either the equity method of accounting or the cost minus impairment adjusted for observable price changes, depending on ownership percentage and other factors that suggest significant influence. The Company concluded it does not have a significant ownership percentage or influence. The Company monitors these investments to evaluate whether any increase or decline in the value has occurred, based on the implied value of recent company financings, public market prices of comparable companies and general market conditions.

The Company also purchased $2.7 million of debt securities from the same privately held company. The available for sale asset was recorded in the prepaid expenses and other current assets line of the consolidated balance sheet to reflect the initial fair value of the instrument acquired. The maturity date of this asset, which was originally due to mature one year from the date of issuance, has been extended to the end of February 2026.

The Company updates its assumptions each reporting period based on new developments and records such amounts at fair value based on the revised assumptions.

5) Inventories

Inventories are comprised of the following (in thousands):

	*December 31, 2025*		*June 30, 2025*
Raw materials	$	65,922	$	57,302
Work in process		23,004		34,298
Finished goods		42,270		38,394
Total	$	131,196	$	129,994

Distribution costs associated with the sale of inventory, which are recorded as a component of selling, general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations were $3.2 million and $2.5 million for the three months ended December 31, 2025 and 2024, respectively. Distribution costs were $6.8 million and $4.9 million for the six months ended December 31, 2025 and 2024, respectively.

6) Goodwill

Changes to goodwill by reportable segment during the period were as follows (in thousands):

	*June 30, 2025*		*Acquisitions*			*Translation Adjustment*			*December 31, 2025*
Electronics	$	459,051	$	-		$	(17,014	)	$	442,037
Engineering Technologies		53,778		(554	)		(181	)		53,043
Scientific		15,454		-			-			15,454
Engraving		78,996		-			1,491			80,487
Specialty Solutions		3,059		-			-			3,059
Total	$	610,338	$	(554	)	$	(15,704	)	$	594,080

7) Warranty Reserves

The expected cost associated with warranty obligations on our products is recorded as a component of cost of sales when the revenue is recognized. The Company’s estimate of warranty cost is based on contract terms and historical warranty loss experience that is periodically adjusted for recent actual experience. Since warranty estimates are forecasts based on the best available information, claims costs may differ from amounts provided. Adjustments to initial obligations for warranties are made as changes in the obligations become reasonable to estimate.

The change in warranty reserves, which are recorded as a component of accrued liabilities were as follows (in thousands):

	*December 31, 2025*			*June 30, 2025*
Balance at beginning of year	$	2,429		$	2,209
Acquisitions and other charges		(48	)		181
Warranty expense		1,230			705
Warranty claims		(707	)		(666	)
Balance at end of period	$	2,904		$	2,429

8) Debt

Long-term debt is comprised of the following (in thousands):

	*December 31, 2025*			*June 30, 2025*
Bank credit agreement	$	535,203		$	553,203
Total funded debt		535,203			553,203
Unamortized issuance costs		(470	)		(688	)
Total long-term debt	$	534,733		$	552,515

The Company's bank credit agreement matures in February 2028.

At December 31, 2025, and June 30, 2025, the Company had $3.5 million and $1.9 million standby letters of credit outstanding, primarily for insurance purposes and had the ability to borrow $212.6 million and $207.7 million under the Facility. 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. The Facility contains customary representations, warranties and restrictive covenants, as well as specific financial covenants which the Company was compliant with as of December 31, 2025 and June 30, 2025.

9) Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

	*December 31, 2025*		*June 30, 2025*
Payroll and employee benefits	$	20,087	$	24,804
Operating lease current liability		12,741		11,129
Restructuring costs		2,312		1,457
Accrued taxes payable		3,455		2,662
Accrued interest		3,037		3,152
Professional fees		2,651		2,304
Warranty reserves		2,904		2,429
Workers' compensation		1,710		1,245
Contingent consideration		330		330
Other		20,176		13,692
Total	$	69,403	$	63,204

10) Derivative Financial Instruments

Information about the Company’s derivative financial instruments is as follows:

Interest Rate Swaps

From time to time as dictated by market opportunities, the Company enters into interest rate swap agreements designed to manage exposure to interest rates on the Company’s variable rate indebtedness. The Company recognizes all derivatives on its consolidated balance sheets at fair value. The Company designates its interest rate swap agreements, including those that may be forward-dated, as cash flow hedges, and changes in the fair value of the swaps are recognized in accumulated other comprehensive income until the hedged items are recognized in earnings. Hedge ineffectiveness, if any, associated with the swaps is reported in earnings within interest expense.

The Company’s effective swap agreements convert the base borrowing rate on $225 million of debt due under our Facility from a variable rate equal to 1 month Secured Overnight Financing Rate (SOFR) to a weighted average fixed rate of 3.48% at December 31, 2025. The fair value of the swaps, recognized in accumulated other comprehensive loss, is as follows (in thousands, except percentages):

Effective Date		*Notional Amount*				*Fixed Interest Rate*			*Maturity*		*December 31, 2025*				*June 30, 2025*
August 30, 2025		$	225,000				3.48	%	August 30, 2028		$	(1,223	)		$	-

The Company reported no losses for the three and six months ended December 31, 2025, as a result of hedge ineffectiveness. Future changes in these swap arrangements, including termination of the agreements, may result in a reclassification of any gain or loss reported in accumulated other comprehensive loss into earnings as an adjustment to interest expense. Accumulated other comprehensive loss related to these instruments is being amortized into interest expense concurrent with the hedged exposure.

Foreign Exchange Contracts

Forward foreign currency exchange contracts are used to limit the impact of currency fluctuations on certain anticipated foreign cash flows, such as collections from customers and loan payments between subsidiaries. The Company enters into such contracts for hedging purposes only. At December 31, 2025 and June 30, 2025, the Company had the following outstanding forward contract related to hedge of intercompany loans. The contract matures in January 2026.

The notional amounts of the Company’s forward contracts are as follows (in thousands):

Currency		*December 31, 2025*				*June 30, 2025*
JPY		$	3,650,000			$	3,250,000

The table below presents the fair value of derivative financial instruments as well as their classification on the balance sheet (in thousands):

	*Liability Derivatives*
	*December 31, 2025*			*June 30, 2025*
Derivative	*Balance Sheet Line Item*	*Fair Value*		*Balance Sheet Line Item*	*Fair Value*
Interest rate swaps	Accrued liabilities	$	1,223		$	-
Foreign exchange contracts	Accrued liabilities		1,689	Accrued liabilities		68
		$	2,912		$	68

The table below presents the amount reclassified from accumulated other comprehensive loss to net income for the periods ended (in thousands):

Details about Accumulated Other	*Three Months Ended*						*Six Months Ended*						*Affected line item in the Unaudited*
Comprehensive Loss Components	*December 31, 2025*			*December 31, 2024*			*December 31, 2025*			*December 31, 2024*			*Condensed Statements of Operations*
Interest rate swaps	$	(298	)	$	(1,454	)	$	(453	)	$	(3,151	)	Interest expense

11) Retirement Benefits

The Company has defined benefit pension plans covering certain current and former employees both inside and outside of the U.S. The Company’s pension plan for U.S. employees is frozen for substantially all participants and has been replaced with a defined contribution benefit plan.

Net periodic benefit cost for the Company’s U.S. and foreign pension benefit plans for the periods ended consisted of the following components (in thousands):

	*U.S. Plans*						*Non-U.S. Plans*
	*Three Months Ended December 31,*						*Three Months Ended December 31,*
	*2025*			*2024*			*2025*			*2024*
Service cost	$	-		$	-		$	56		$	62
Interest cost		2,288			2,386			311			302
Expected return on plan assets		(2,521	)		(2,641	)		(300	)		(343	)
Recognized net actuarial loss		1,175			1,055			-			-
Amortization of prior service cost		-			-			(1	)		(1	)
Net periodic (benefit) cost	$	942		$	800		$	66		$	20

	*U.S. Plans*						*Non-U.S. Plans*
	*Six Months Ended December 31,*						*Six Months Ended December 31,*
	*2025*			*2024*			*2025*			*2024*
Service cost	$	-		$	-		$	114		$	125
Interest cost		4,577			4,772			626			608
Expected return on plan assets		(5,041	)		(5,282	)		(604	)		(690	)
Recognized net actuarial loss		2,349			2,111			-			-
Amortization of prior service cost		-			-			(2	)		(2	)
Net periodic (benefit) cost	$	1,885		$	1,601		$	134		$	41

The following table sets forth the amounts recognized for the Company's defined benefit pension plans (in thousands):

Amounts recognized in the consolidated balance sheets consist of:	*December 31, 2025*			*June 30, 2025*
Prepaid benefit cost	$	3,322		$	3,294
Current liabilities		(1,258	)		(589	)
Non-current liabilities		(30,957	)		(31,721	)
Net amount recognized	$	(28,893	)	$	(29,016	)

The contributions made to defined benefit plans are presented below along with remaining contributions to be made for the current fiscal year (in thousands):

	*Fiscal Year 2026*
	*Three Months Ended*		*Six Months Ended*
Contributions to defined benefit plans	*December 31, 2025*		*December 31, 2025*		*Remaining Contributions*
United States, funded plan	$	1,483	$	2,742	$	3,807
United States, unfunded plan		28		54		62
Germany, unfunded plan		-		-		275
	$	1,511	$	2,796	$	4,144

12) Income Taxes

The Company's effective tax rate from continuing operations for the three and six months ended December 31, 2025 was 24.1% and 24.3%, respectively, compared with 35.5% and 22.6% for the equivalent prior year periods, 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.

13) Earnings Per Share

The Company uses shares acquired through treasury stock repurchases for the issuance of shares of common stock for the settlement of awards under its stock-based compensation plans, with the net effect of these transactions accounting for the change in common stock outstanding.

The following table sets forth a reconciliation of the number of shares (in thousands) used in the computation of basic and diluted earnings per share:

	*Three Months Ended December 31,*				*Six Months Ended December 31,*
	*2025*		*2024*		*2025*		*2024*
Basic - Average shares outstanding		12,043		11,942		12,027		11,872
Dilutive effect of unvested, restricted stock awards		12		83		46		100
Diluted - Average shares outstanding		12,055		12,025		12,073		11,972

Earnings available to common stockholders are the same for computing both basic and diluted earnings per share. There were no outstanding instruments that had an anti-dilutive effect at December 31, 2025 or 2024.

Performance stock units of 62,558 and 111,830 for the three and six months ended December 31, 2025 and 2024, respectively, are excluded from the diluted earnings per share calculation as the performance criteria have not been met.

14) Accumulated Other Comprehensive Loss

The components of the Company’s accumulated other comprehensive loss are as follows (in thousands):

	*December 31, 2025*			*June 30, 2025*
Foreign currency translation adjustment	$	(98,962	)	$	(74,788	)
Unrealized pension losses, net of tax		(89,118	)		(90,972	)
Unrealized gains on derivative instruments, net of tax		61			995
Total	$	(188,019	)	$	(164,765	)

15) Contingencies

From time to time, the Company is subject to various claims and legal proceedings, including claims related to environmental remediation, either asserted or unasserted, that arise in the ordinary course of business. While the outcome of these proceedings and claims cannot be predicted with certainty, the Company’s management does not believe that the outcome of any of the currently existing legal matters will have a material impact on the Company’s consolidated financial position, results of operations or cash flow. The Company accrues for losses related to a claim or litigation when the Company’s management considers a potential loss probable and can reasonably estimate such potential loss.

16) Industry Segment Information

The Company has five reportable segments organized around the types of products sold:

	•	Electronics – manufactures and sells electronic components for applications throughout the end user market spectrum;
	•	Engineering Technologies – provides net and near net formed single-source customized solutions in the manufacture of engineered components for the aviation, aerospace, defense, energy, industrial, medical, marine, oil and gas, and manned and unmanned space markets;
	•	Scientific – sells specialty temperature-controlled equipment for the medical, scientific, pharmaceutical, biotech and industrial markets;
	•	Engraving - provides mold texturing, slush molding tools, project management and design services, roll engraving, hygiene product tooling, low observation vents for stealth aircraft, and process machinery for a number of industries;
	•	Specialty Solutions – an aggregation of two operating segments that manufacture and sell refrigerated, heated and dry merchandizing display cases and single and double acting telescopic and piston rod hydraulic cylinders.

Net sales and income from continuing operations by segment were as follows (in thousands):

	*Three Months Ended December 31, 2025*
	Electronics			Engineering Technologies			Scientific			Engraving			Specialty Solutions			Total
Net Sales	$	115,668		$	30,636		$	19,502		$	35,728		$	19,786		$	221,320
Segment Expenses		(85,903	)		(26,259	)		(15,014	)		(29,160	)		(17,674	)		(174,010	)
Segment operating income		29,765			4,377			4,488			6,568			2,112			47,310
Corporate																	(10,682	)
Restructuring costs																	(438	)
Acquisition related costs																	(617	)
Income From Operations																	35,573
Interest expense																	(7,914	)
Other non-operating expense, net																	(490	)
Income from continuing operations before income taxes																$	27,169

	*Six Months Ended December 31, 2025*
	Electronics			Engineering Technologies			Scientific			Engraving			Specialty Solutions			Total
Net Sales	$	226,220		$	60,530		$	38,952		$	71,568		$	41,481		$	438,751
Segment Expenses		(168,172	)		(52,536	)		(29,785	)		(58,464	)		(36,481	)		(345,438	)
Segment operating income		58,048			7,994			9,167			13,104			5,000			93,313
Corporate																	(20,622	)
Restructuring costs																	(6,436	)
Acquisition related costs																	(1,049	)
Income From Operations																	65,206
Interest expense																	(16,826	)
Other non-operating expense income, net																	(225	)
Income from continuing operations before income taxes																$	48,155

	*Three Months Ended December 31, 2024*
	Electronics			Engineering Technologies			Scientific			Engraving			Specialty Solutions			Total
Net Sales	$	95,923		$	22,649		$	18,477		$	31,454		$	21,311		$	189,814
Segment Expenses		(78,504	)		(18,957	)		(13,759	)		(27,332	)		(17,749	)		(156,301	)
Segment operating income		17,419			3,692			4,718			4,122			3,562			33,513
Corporate																	(7,730	)
Restructuring costs																	(920	)
Acquisition related costs																	(16,400	)
Income From Operations																	8,463
Interest expense																	5,575
Other non-operating expense, net																	890
Income from continuing operations before income taxes																$	1,998

	*Six Months Ended December 31, 2024*
	Electronics			Engineering Technologies			Scientific			Engraving			Specialty Solutions			Total
Net Sales	$	173,656		$	43,179		$	36,170		$	64,817		$	42,456		$	360,278
Segment Expenses		(139,209	)		(35,477	)		(26,703	)		(54,871	)		(35,346	)		(291,606	)
Segment operating income		34,447			7,702			9,467			9,946			7,110			68,672
Corporate																	(15,864	)
Restructuring costs																	(2,006	)
Acquisition related costs																	(18,240	)
Income From Operations																	32,562
Interest expense																	6,552
Other non-operating expense, net																	862
Income from continuing operations before income taxes																$	25,148

Capital expenditures and depreciation and amortization expense by segment were as follows (in thousands):

	*Capital Expenditures*				*Depreciation and Amortization*
	*Three Months Ended December 31, 2025*		*Three Months Ended December 31, 2024*		*Three Months Ended December 31, 2025*		*Three Months Ended December 31, 2024*
Electronics	$	4,079	$	2,248	$	5,806	$	4,957
Engineering Technologies		761		1,429		1,549		897
Scientific		180		474		318		311
Engraving		770		1,483		1,778		1,916
Specialty Solutions		1,868		1,095		420		363
Corporate and Other		6		236		113		61
Total	$	7,664	$	6,965	$	9,984	$	8,505

	*Capital Expenditures*				*Depreciation and Amortization*
	*Six Months Ended December 31, 2025*		*Six Months Ended December 31, 2024*		*Six Months Ended December 31, 2025*		*Six Months Ended December 31, 2024*
Electronics	$	7,747	$	5,799	$	11,591	$	8,371
Engineering Technologies		2,346		2,892		2,957		1,783
Scientific		251		543		638		630
Engraving		1,342		2,424		3,566		3,945
Specialty Solutions		2,324		1,538		842		714
Corporate and Other		74		494		207		123
Total	$	14,084	$	13,690	$	19,801	$	15,566

Net sales include only transactions with unaffiliated customers and include no intersegment sales. Income from operations by segment excludes interest expense and other non-operating (income) expense.

17) Restructuring

The Company has undertaken a number of initiatives that have resulted in severance, restructuring, and related charges. Related charges may include third party assistance with analysis and implementation of these activities.

2026 Restructuring Initiatives

The Company continues to focus its efforts to reduce cost and improve productivity across its businesses. Restructuring expenses primarily related to facility rationalizations and consolidations. The Company expects the 2026 restructuring activities to be completed by fiscal year 2027.

Prior Year Restructuring Initiatives

Restructuring expenses primarily related to headcount reductions and other cost saving initiatives within our Engraving and Electronics segments. The Company expects the prior year restructuring activities to be completed by fiscal year 2026.

A summary of charges by initiative is as follows (in thousands):

	*Three Months Ended December 31, 2025*						*Six Months Ended December 31, 2025*
Fiscal Year 2026	*Involuntary Employee Severance and Benefit Costs*		*Other*		*Total*		*Involuntary Employee Severance and Benefit Costs*		*Other*		*Total*
Current year initiatives	$	197	$	51	$	248	$	4,798	$	133	$	4,931
Prior year initiatives		15		175	$	190		861		644	$	1,505
	$	212	$	226	$	438	$	5,659	$	777	$	6,436

	*Three Months Ended December 31, 2024*						*Six Months Ended December 31, 2024*
Fiscal Year 2025	*Involuntary Employee Severance and Benefit Costs*		*Other*		*Total*		*Involuntary Employee Severance and Benefit Costs*		*Other*		*Total*
Current year initiatives	$	515	$	92	$	607	$	780	$	258	$	1,038
Prior year initiatives		80		233		313		424		544		968
	$	595	$	325	$	920	$	1,204	$	802	$	2,006

Activity in the restructuring liability reserve related to the initiatives is as follows (in thousands):

Current Year Initiatives	*Involuntary Employee Severance and Benefit Costs*			*Other*		*Total*
Restructuring liabilities at June 30, 2025	$	-		$	-	$	-
Additions and adjustments		4,798			133		4,931
Payments		(2,881	)		-		(2,881	)
Restructuring liabilities at December 31, 2025	$	1,917		$	133	$	2,050

Prior Year Initiatives	*Involuntary Employee Severance and Benefit Costs*			*Other*			*Total*
Restructuring liabilities at June 30, 2025	$	1,397		$	60		$	1,457
Additions and adjustments		861			644			1,505
Payments		(1,996	)		(704	)		(2,700	)
Restructuring liabilities at December 31, 2025	$	262		$	-		$	262

Prior Year	*Involuntary Employee Severance and Benefit Costs*			*Other*			*Total*
Restructuring liabilities at June 30, 2024	$	1,253		$	194		$	1,447
Additions and adjustments		423			545			968
Payments		(1,261	)		(603	)		(1,864	)
Restructuring liabilities at December 31, 2024	$	415		$	136		$	551

The Company’s total restructuring expenses by segment are as follows:

	*Three Months Ended December 31, 2025*						*Six Months Ended December 31, 2025*
	*Involuntary Employee Severance and Benefit Costs*		*Other*		*Total*		*Involuntary Employee Severance and Benefit Costs*		*Other*		*Total*
Electronics	$	-	$	90	$	90	$	426	$	389	$	815
Engineering Technologies		19		-		19		19		-		19
Engraving		193		136		329		5,143		388		5,531
Specialty Solutions		-		-		-		71		-		71
	$	212	$	226	$	438	$	5,659	$	777	$	6,436

	*Three Months Ended December 31, 2024*						*Six Months Ended December 31, 2024*
	*Involuntary Employee Severance and Benefit Costs*		*Other*		*Total*		*Involuntary Employee Severance and Benefit Costs*		*Other*		*Total*
Engraving	$	498	$	325	$	823		1,028		802		1,830
Electronics	$	97	$	-		97		97		-		97
Corporate		-		-		-		79		-		79
	$	595	$	325	$	920	$	1,204	$	802	$	2,006

Restructuring expense is expected to be approximately $1.0 million for the remainder of fiscal year 2026.

18) Redeemable Noncontrolling Interest

The redeemable noncontrolling interest consists of 9.9% of common stock of Narayan Powertech Private Limited ("Narayan"), a privately-held India-based company. The Company owns the remaining 90.1%. During the three and six months ended December 31, 2025, Narayan declared and distributed a dividend of $0.9 million and $1.6 million, respectively, to the Company and its noncontrolling interests, allocated according to equity ownership.

In accounting for the subsequent measurement of the redeemable noncontrolling interest measurement adjustments pursuant to ASC 480, Distinguishing Liabilities from Equity, the Company has made accounting policy elections to record any such applicable changes on the immediate recognition of the full adjustment required to report the redeemable noncontrolling interest at its redemption value, while also electing to record such adjustments under the income method, with a corresponding offset recorded to the Net income attributable to noncontrolling interests in consolidated subsidiaries within the consolidated statement of operations for the period in which such measurement adjustment becomes required. Given the lack of approval from RBI for the second closing and share swap, part of the noncontrolling interest is currently redeemable and the remaining noncontrolling interest is probable of redemption as of December 31, 2025. A re-measurement adjustment of $18 million has been recorded for the three and six months ended December 31, 2025 to record the non-controlling interest as of December 31, 2025 at its estimated redemption value based on the terms of the agreement with the non-controlling interest shareholder. This re-measurement adjustment has been recorded as a component of the total net income attributable to redeemable noncontrolling interest financial statement line in the Company’s condensed consolidated statements of operations.

Item 2.

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

STANDEX INTERNATIONAL CORP/DE/ 10-Q