Good morning. My name is Letricia, and I will be your conference operator today. At this time, I would like to welcome everyone to the Standex International Q1 2014 Earnings Conference Call. [Operator Instructions] Thank you. I would now like to turn the conference over to Mr. David Reichman of Sharon Merrill. Please go ahead, sir.

Thank you. Please note that the presentation accompanying management's remarks can be found on Standex's Investor Relations website, www.standex.com. Please see Standex's Safe Harbor passage on Slide 2. Matters that Standex management will discuss on today's conference call include predictions, estimates, expectations and other forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially. You should refer to Standex's recent SEC filings and public announcements for a detailed list of risk factors. In addition, I would like to remind you that today's discussion will include references to EBITDA, which is earnings before interest, taxes, depreciation and amortization; adjusted EBITDA, which is EBITDA excluding restructuring expenses and onetime items; non-GAAP net income; non-GAAP income from operations; non-GAAP net income from continuing operations; and free operating cash flow. These non-GAAP financial measures are intended to serve as a complement to results provided in accordance with accounting principles generally accepted in the United States. Standex believes that such information provides an additional measurement and consistent historical comparison of the company's performance. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available in Standex's first quarter news release. On the call today is Standex Chief Executive Officer, Roger Fix; and Chief Financial Officer, Tom DeByle. I'd now like to turn the call over to Roger.

Thank you, David, and good morning, everyone. Please turn to Slide 3. Our revenues and non-GAAP EPS for the first quarter of fiscal 2014 were both flat with Q1 last year. It was a disappointing quarter in Food Service. But our other 4 businesses performed well, especially given the economic conditions. Slightly lower organic sales for the quarter were offset by a 0.5% positive foreign currency exchange effect. We ended the quarter with a modest net debt position of $4 million and our balance sheet is very well positioned to support future investments in organic growth, as well as acquisitions. We're continuing to see soft demand in several end-user segments. But overall, our strategy for the business is working well. Our bottom line results for the quarter reflected some nonrecurring items in the Food Service group that we're now putting behind us. As you can see on Slide 4, our trailing 12 months EPS is $3.70, up 9% from full year fiscal 2012 and up 25% from full year fiscal 2011. Although, market conditions in Food Service remain softer than we would like, we're continuing to take cost out of the business and launching a numbers of new products that we believe will be very successful in expanding our competitiveness in addressable market in the near term. I have more to say about the performance and outlook at each of our business segments after Tom takes you through the financials. Tom?

Thank you, Roger, and good morning, everyone. Please turn to Slide 5, which summarizes our first quarter results. As Roger mentioned, net sales for the first quarter of fiscal 2014 were essentially flat with the fiscal quarter last year at $183.6 million. Excluding special items from both periods, non-GAAP operating income was $17.8 million compared with $19.3 million for the first quarter of fiscal 2013. Slide 6 is a quarterly bridge that illustrates the tax affected impact to special items on net income from continuing operations. These items include tax affected $2.7 million restructuring charges, $0.2 million of nonrecurring tax benefit and $0.1 million of nonrecurring management transition expense in the first quarter of fiscal 2014. In the comparable period of fiscal 2013, there were $2.2 million of tax affected restructuring charges and $1 million of acquisition-related costs. Excluding special items from both periods, non-GAAP net income from continuing operations was $13.1 million or $1.02 per diluted share compared with $13.1 million or $1.02 per diluted share in the first quarter of fiscal 2013. Turning to Slide 7. You can see our trailing 12-month performance. We reported a 6.5% increase in sales, non-GAAP operating income grew 3.8% to $67.1 million and adjusted EBITDA grew 5.3% to $82.9 million. On Slide 8, we had a reconciliation of net income from continuing operations to non-GAAP net income from continuing operations for the trailing 12-month period. Excluding special items, non-GAAP net income from continuing operations was up 5.5% to $47.2 million or $3.70 per diluted share. Turning to Slide 9. Net working capital at the end of the first quarter was $132.5 million compared with $117.4 million at the end of the fourth quarter of fiscal 2013 and $131.2 million at the end of Q1 last year. Working capital turns were 5.5 in the first quarter of fiscal 2014. Slide 10 illustrates our debt management. As Roger discussed earlier, we ended the first quarter in a net debt position of approximately $4 million. This compares with net debt position of $35 million at the end of Q1 last year. We define net debt as funded debt less cash. Our balance sheet leverage ratio of net debt to capital was 1.3% at the end of the quarter compared with 12.1% a year ago. Our strong balance sheet is well positioned to meet our needs. We continue to have ample financial flexibility to fund growth, acquisitions and other strategic initiatives. One other item that happened during the quarter related to our previously discontinued ADP business, the company recorded a $1.2 million pretax expense as a result of obligations triggered under a guarantee provided to the buyers. The obligation is related to a withdrawal from a multi-employer pension plan, which the company previously participated. With that, I'll turn the call back to Roger.

Thank you, Tom. Please turn to Slide 12, Food Service Equipment Group, and I'll begin our segment overview. Sales in Food Service decreased 3.6% from Q1 last year and operating income was down 34%. Overall, the lower sales year-over-year reflected soft demand in several large chains, including several quick-serve restaurants and drugstores, as well as a tough comparison with Q1 of fiscal 2013, when we had several large product rollouts. The year-over-year decrease in profitability of $4.6 million was due to 2 issues: First, lower volume of $4 million resulted in roughly a $1 million reduction in profit; and second, we incurred a number of operational issues at the custom products business, which had a negative impact on profitability of $3.6 million. The operational issues at the custom products business revolved around unfavorable sales mix, machine downtime associated with a laser-cutting machine and an inventory write-down. We believe these are onetime issues at our custom products business and will not repeat going forward. We have put in place a number of corrective actions at the custom products business, which we believe will address the performance issues incurred during the first quarter. We've installed a state-of-the-art CNC laser, powered-metal cutting machine that is now up and running. In addition, we're working to migrate this part of the business away from its heavy reliance on a customization model, which relies on producing very complex customized serving and merchandising counters and displays for one-off projects and towards a business model that relies more on standard products that are modified for specific applications and chain work, which are more repeatable and more standard in nature. We believe this transition in the business will improve our ability to execute on a profitable basis. As we implement this strategy, we should see steady sequential margin improvement…

[Operator Instructions] Your first question comes from the line of Beth Lilly with Gabelli.

I wanted to get a little more insight to what's going on in your Food Service Equipment Group. Your revenues were down. And Middleby reported the other day and their revenues were up, on an organic basis, close to 12%. So the decline -- can you talk about the custom products group? The business generated about $105 million in revenue this quarter. What amount of that is custom? And then, I guess, as you look going forward, you've talked about getting these -- your Food Service Equipment margins, I think, to kind of 12%, 13%. So where are you on that path? And how long do you think it will take you to get there?

Okay. A number of questions. On the top line, the custom business represents on the order of, say, 20% of our total revenues. But in general, our revenue issue in the first quarter was really related to what chains are we on versus what chains are we not on. And it was very, what I'll call spotty, as we look at -- for example, McDonald's was down about 25%, and we've confirmed through the channel that just about everybody that supplies them was down. US Foods was one of our larger accounts, was also down double digit. Yet people like Tim Hortons and Subway were up, again, double digits. So we're seeing some, what I call, spottiness as we look across, particularly in the QSR side of the business. We reported over the last several quarters that the drugstore chains, and here we're servicing Walgreens, CVS. In particular, they've fairly significantly reduced the number of new store openings. So the focus there has been on acquisitions in the case of Walgreens, where they go over and take over a small regional chain. And then we'll be involved in retrofitting those businesses or remodels. And again, that activity is just not as robust. So you're seeing us do, particularly in Food Services, to try to enhance our penetration in some of the other segments where we've been less penetrated, if you will, over the years. And we've identified both the convenience store channel as well as the dollar store segment as good opportunities, but it takes time. As I mentioned in the script, there we have a situation where the product portfolio and the cost position of those markets is different than our traditional markets. So we're really going through an evolution, if you will. And I think as you compare then our top line performance versus others in the market segment, we have some, I think, rather unique challenges that we have to address.

So would you say then -- I mean, if you look at your competitors, and the one in particular I was referencing, are they -- do they have such a dominant share that as the chains grow, their business grows and probably have this hand-and-glove growth relationship, is that why you're unable to grow your revenues at that same rate?

I think the message is more that we have -- some of our other competitors are more exclusively focused on the QSR chains. And over the last several years, certainly that's been where the largest growth has been. Traditionally, we have exposure to other segments. Particularly in the drug store segment, we have a very dominant position, where a lot of our competitors traditionally haven't played. And yes, if you look just at Walgreens, historically over the last 10 years, in the time frame 10 to 5 years ago, they were building 400 to, say, 450 stores a year. They're down to 200. So we're having to transition away -- not away from them, but to transition to other new segments. And again, this takes time. So that's where the introduction of new products, bringing these new products into test stores and getting that kind of experience with these new segments is really where we try to focus over the last year or so.

Okay. And then what about your operating margin?

Again, we haven't made any specific statements about any of our segments. But if you look at our online materials, we're saying that we need to get all of our business units north of 12%, and that would apply certainly to Food Service as well.

Okay. And so how long do you think it will take you to get there?

Well, again, we haven't made any prediction in that regard. What we are trying to do is to help people understand where we're at and where we want to go. So again, we've said that the $3.6 million, which if you do the math, is a little over 3% of operating margin in the quarter, which is a one-off, and we've got that behind us. We've said that the Cheyenne operation consolidation is going to generate around $4 million of cost savings, which is about another point of margin. So -- and again, we've given you a time frame on that. So I'll just kind of have you think about what happened in the quarter. Again we lost 3.5 points of margin roughly. We've got another point of margin coming through the Cheyenne facility. We were saying that, that will be complete by the end of fiscal '15. And then, again, we've got to get some growth out of that business as well, which will give us some volume leverage and margin improvement as a result.

[Operator Instructions] There are no further questions at this time, I'll turn the conference back over to Mr. Roger Fix for any closing remarks.

We thank everyone for participating in the call this morning, and we look forward to giving you an update again next quarter. Thanks very much.

Thank you for participating in today's conference call. You may now disconnect.