Ladies and gentlemen, thank you for standing by and welcome to Standex International’s Third Quarter 2016 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will a question-and-answer session [Operator Instructions], thank you. I would now like to turn the conference over to Matt Roche [ph]. Please go ahead sir.

Thank you, Paula. 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 one-time 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 third quarter news release. On the call today is Standex President and Chief Executive Officer, David Dunbar and Chief Financial Officer, Tom DeByle. Please turn to Slide 3 as I turn the call over to David.

Thank you, Matt [ph] and good morning. In our third quarter the things we've communicated in recent quarters continue to play out. We continued to make good progress operationally during the quarter as we faced challenges to the top line in certain of our end markets. Revenue declined 2% principally due to continued softness in oil and gas markets and in our refrigeration end markets. Foreign exchange had a negative effect of 1.4% and acquisitions contributed positive 1.4%. Third quarter non-GAAP operating income was down 3.7% and non-GAAP EPS declined 8.8% to $0.93. We had a net cash position of $7.4 million at the end of Q3. I am also pleased to report that the Standex's Board of Directors has approved a revision to its share repurchase plans, under which the Company may now repurchase up to an aggregate of $100 million of its outstanding common stock. To date, we have used our existing stock repurchase program primarily to offset dilution caused by employee stock issuances. This revision enhances our capital allocations strategy by giving us the flexibility to repurchase shares opportunistically. As you may recall, Standex has a disciplined capital allocation process with the following quarter of the priorities maintenance and growth capital, debt pay down if levered, acquisitions and return of cash to shareholders. The Standex value creation system and capital allocation processes are beginning to show results and we're confident that over the coming years they would generate significant shareholder value. We are in the process of working through the details to implement the repurchase program and expect it to be in place in the fourth quarter. There are few key moving pieces within our recorded numbers. So let me share some high level observations to convey our confidence that the execution of priorities remains intact and…

Slide 4 shows our historical trend of adjusted earnings per share and sales. On a trailing 12 month basis, adjusted earnings per share were $4.61 through March 31, 2016, versus $4.49 in the 12 months ended March 31, 2015, a 2.7% increase. Sales were 757.6 million on a trailing 12 month basis as of March 31, 2016, versus $769.7 million in the prior period. Please turn to Slide 7. Three of our five segments reported organic growth for the quarter. On the chart, you can see the contributions from acquisitions and the currency effect for each segment. Overall, organic growth was down with acquisitions contributing 1.4% versus Q3 last year due to the Northlake acquisition in electronics. Currency had a negative effect of 1.4%, which resulted in an overall sales decline of 2% to 177.5 million for the quarter. Please turn to Slide 8, which summarizes our third quarter results. Excluding special items, operating income declined 3.7% to 17.6 million from 18.2 million a year ago. Adjusted EBITDA declined 3% to 21.9 million or 12.4% of sales compared with 22.6 million or 12.5% of sales in Q3 last year. SG&A expenses for the quarter were up from the prior year primarily due to employee medical costs and expenses associated with recent acquisitions which were not a component of the prior year results. Please turn to Slide 9, which is a bridge that illustrates the impact of special items on net income from continuing operations. For Q3 of fiscal 2016, these items included tax affected restructuring charges of approximately $287,000. The restructuring charges on the quarter primarily related to the closure of our Canadian electronics facility. Turning to Slide 10, net working capital at the end of the third quarter of fiscal 2016 was 144.6 million compared with 149.5 million a…

Thank you, Tom. Please turn to Slide 15, and I'll begin our segment overview with the Food Service Equipment Group. As I mentioned at the outset of the call, margin improvement continues to be a key area of focus within Food Service Equipment and the focus is paying off. Operating income margins increased 260 basis points to 9.6% and the sales decrease of 3.4% from Q3 last year. The overall decrease in sales was driven primarily by lower refrigeration sales as well as ongoing actions to eliminate less profitable products. The refrigeration sales decline was the result of decreased sales to large national chains due to reduction of store expansion and merger of Family Dollar and Dollar Tree, partially offset by sales through dealers. In Cooking Solutions, sales increased approximately 2% year-over-year primarily driven by strong growth in the supermarket sector and increased shipments in our Fryer chain business. This growth was partially offset by actions to eliminate lower margin commodity products. On time shipments continue to improve and that should help fuel sales expansion during the remainder of the fiscal year. Our Ultrafryer acquisition remains on track and we are actively investing in its product line. Specialty solution was up in Q3 driven by our Pumps business partially offset by exchange rate declines. We're making significant progress in Food Services, we apply Standex's operational excellence initiative to all our production facilities. With these initiatives in place and demonstrating early results, the team is reviewing its commercial strategic initiatives focusing on our product line, attracting adjacencies and sales excellence to ensure the business remains aligned with the Standex 20/20 vision. We anticipate top line performance challenges to continue in our refrigeration group. On the bottom line, we expect that our operational excellence activities will continue to improve overall performance in…

[Operator Instructions] Your first question comes from the line of Schon Williams of BB&T Capital Markets.

I want to start up on the equipment, can you just talk a little bit about, I think you called out 1.5 million of product rationalization, was that -- I think that was within Cooking, but is that the extent of the product rationalization or was there anything else within other segments and may be can you talk about, what we should expect over the next several quarters is there more to be done there?

So the, the two major contributors for that were on, the sale of the [indiscernible] product line last summer, that was in June and the exit of their UK direct sale presence, was about just over $1.5 million in the quarter. Now the top rationalization work continues in the business, so as we’ve said before, the quick [ph] service equipment business, our sales could get a small and incredibly larger as we focus on more profitable core products.

I mean just sidewise, David is there, I don’t know is there something -- are there bigger chunks that we should be thinking about as we move forward?

No, I don’t think so.

Okay more kind of around the fringes you’ll do some additional chopping here and there, and then what about just in terms of the growth prospects for that segment, could you just talk a little bit about what you're seeing from an industry perspective, I know refrigeration obviously has been a headwind for several quarters now, hopefully some of that starts to anniversary as we move into kind of next quarter. But can you just talk a little bit about maybe what the trends are within the industry as a whole, once we anniversary some of these headwinds on refrigeration do you think getting back to kind of I don't know mid to low single digit organic growth is that plausible?

Yes, let’s cut it into pieces. So in the Cooking business marketing indicators are that the market trends continue to in a 4% growth rate and we saw growth in cooking in the quarter. We also believe that with the length of time we've been performing better out of the Cooking solutions group that we expect it well -- that Cooking business will joint market growth trends. In the Specialty business 4% to 5% growth is reasonable expectation there. The big question mark for us is refrigeration these top customers, the biggest issue for us has been the ability I guess of our sales organization to communicate to us what customers spending plans are. I think we have room to improve our management and our sales excellence programs set their visibility to this, but OEM customers will start increasing their spending in North America in refrigeration, a little hard to predict. So I think we mentioned that we expect the softness to continue in the quarter. But as you pointed out the refrigeration business isn't just sitting on their hand either, they are very active in adjusting their cost structure, they actually increased their EBIT margin rates in the quarter despite the decline.

Okay and does -- I don’t know, does the continued weakness in refrigeration, does that change your perspective on kind of the long-term opportunity for the Food Equipment Segment?

I’d have to answer that no today. The history of refrigeration business, if go back over several years within, to follow Standex, the refrigeration business has had these cycles, trending upwards but it has been cyclical as national chains have large rollouts, we benefit from those and then they slow down. Back in 2011, while [indiscernible] building 600 stores that was a chief source of growth for the business that decline suddenly grew and these are the customers we prefer too, have created this sort of lumpiness on the top line. So our expectation long-term growth, it hasn’t changed and we'll continue to communicate as we get closer to customers and understands where the market is going, but we just see this as a combination of timing and natural cyclicality and national rollout.

That's hope and I wanted to switch gears a little bit to the share repurchase. Looking back at kind of 15 to 16 years of history, doesn’t look like you guys have done the material repurchase here and we think on modern history, can you just talk a little bit about what changed the perspective on kind share repurchases? And then is there any concern that maybe the M&A pipeline is slowing down a little bit so maybe that's causing some of the shifts to repurchase and then maybe Tom can maybe just address kind of like maybe the pace of how we should expect that repurchase kind of in line with free cash flows or kind of more opportunistic, just some talks about the pace of that?

Yes, great question. So let me first take in general, the capital allocation story we've been very pretty clear about how we've prioritized our capital allocation first to maintenance capital, then growth capital before highly levered, we want to manage our debt, we paid down our debt. Next priorities acquisitions and then finally returning cash to shareholders in the form of dividends as in the past we said potentially a buyback. But Schon, we didn't really have a tool to buy share from the market. Our authorization was focused on countering the dilution program from execute comp, so the first thing to understand is this complete our capital allocation toolkit, if you will. And our intent here is really just to use this opportunistically. We believe in the long-term prospects, long-term value creation of the business and we think the market will present us with opportunities to purchase share opportunistically. You've also mentioned the M&A pipeline that it is getting busier. I am personally spending more of my time on M&A activities now than I did a year ago. I see the first couple of years I was here, focused a lot on putting in place OpEx, and growth disciplines, getting the organic management processes in place. And as I visualizer the pie chart in my chart, there is a much bigger slice going to M&A, I'll say the pipeline is more active. So please don't read into the buyback that there is any dampening of our expectations on M&A side. I'll let Tom handle your last question.

Schon like David said, in the priority list it’s at the bottom, you know what I mean, we want to first help them, the maintenance capital the growth capital, if we’re levered, we pay down debt and then look at acquisitions and then finally return cash to shareholders through either dividends or share buyback. So I won’t anticipate a large purchase of share, we have nothing planned right now, just doing it opportunistically when the market disconnects from our price.

[Operator Instruction] Your next question comes from the line of Chris McGinnis of Sidoti & Company.

Can you just maybe dig a little bit into the kind of new product development on the Food Service side and maybe where you are compared to historically and where you think you need to be to kind of change of the volume or the growth trend, in that division.

That is a work in process, as that you know, lets separate again the three parts of the business cooking, specialties and refrigeration. Refrigeration has continued to churn out new products in the sense that, there are sort of variations on platforms and there is continues evolution of the product line that has continued more or less on pace in refrigeration. Cooking I would say, new product development really went on the back burner as we were going through the consolidation and specially this lead the last move that was an attention a year ago we moved it to Logalas [ph], our new product development beginning to ramp up, we had some market tests going on, in cooking solutions to lower, what opportunities are out there, were we want to develop, a little early from way to communicate what our expectations is about, how extensive that will be. Although -- and already you will see some new products coming from our different business or BKI brand [indiscernible] for an example. Our comp at that, we have the many comp we’ll be presenting and we have a sort of conveyer oven, it’s a new product in the bakers pride brand. So maybe one way to answer it is, we’re probably in kind of second turning of that gain, just starting to ramp up our new product development in June. The thirteen and the specialty side, probably continues on pace, certainly federal, although we’re starting to see some pretty effective opportunities in the Pump business that could result in some growth this next year so. I’d say that the -- if I’m not -- I’m really confusing you here, cooking needs to ramp it up and they started the market test to identify new opportunities.

And I guess just a follow up on that with the innovation, it is the innovation more important to drive growth in the end segment, or is it more about demand trends and being opportunistic on where you put your attention?

I think it’s sort of combination of both, we are not the biggest player out there and were we succeed is, while we can enter into a relation with a customer who hasn’t change initiatives, a changed plan we can work with them to develop equipment that fits their new kitchen concepts or in the face of a combi-over to help them develop the menu around it. So out sweet spot tends to be maybe smaller regional chains, higher end chains with some level of customization and your customer intimacy possible. I think the challenge is more finding the right customers in the market palace, and our innovations follows the customer needs.

Thank you very much and then one just last question on the engineering, you talked about growth in Q4, could you just may be -- is there a platform at somewhere that should drive that, reverse to that trend?

Yes, its growth in aviation, there was a chart on the bottom of the page and it shows how the mix of the market service has changed overtime. Aviation continues to ramp up and oil and gas, look where it is now, we think it’s probably going to bounce along the bottom where it is, now in the future. So it was lapsed oil and gas decline and aviation growth will provide there Q4 growth. And we’ve got this new plan, see Wisconsin support airbus, which we will be producing in June.

Your next question comes from Liam Burke of Wunderlich.

David, could you give us a sense on, I mean electronics side of the business. Where the new product pipeline is coming from and how strong it is, and balance that off against the how the M&A opportunities are?

Yes well, let’s see, how to answer that, I guess first just from a macro standpoint. Our long term expectation from this electronics business, we communicated, we think of 4% to 5% growth business and I would say that the magnitude of the opportunities that we’re being awarded and that we’re developing the market place to support that level of business. As I mentioned in the script, some of our recent awards have been with our traditional sensors, we also are expanding into adjacent spaces with new technology. Last quarter we communicated a new capacitive level sensor which is a new technology for us, we showed a picture in -- of a products actually is a Northlake product which is more of certain intelligent circuit breaker that’s been rollout in Florida powered light to help them more efficiently manage their grid. So the high reliability magnetic space can support the electrical grid, electrical distribution is growth area for us as well.

And back on engineering, you've mentioned -- well space is typically lumpy, is there any change, do you see any change overtime on how that business is growing?

You know what, I was -- if anyone on the line ever wants to go to a very interesting trade show, The Space Symposium in Colorado Springs, I was there a few weeks ago. And obviously in the Space business -- there was some turbulence in Space business with the emergence of call it Space 2.0, the commercialization with space that will change the way the dollars are spent in Space, our view is that the market continues long-term low slow maybe a 2% growth and our participation in that we believe will continue to be lumpy as it has been in the past. But we -- our long-term expectations remain about where it’s been for us with slight growth.

[Operator Instructions] Your next question comes from the line of Beth [Indiscernible].

I have two questions, the first one is I just wanted to drill down into the refrigeration side of your Food Equipment business, so what is the trend that’s going that there is no indication what the spending will be, there is consolidation among the chains, is it there uncertainty in terms of new store opening, can you give us some qualitative perspective on that?

Yes, that's a great question and one that’s got us preoccupied. I'd say every chain, it has a slightly different story but the gradation on the team is there is uncertainty towards when national programs will be rolled out. We're participating in bids and our queues, we're working with customers on perspective rollouts with drugstores and with some of the supermarkets, but when they'll pull the plug and these now programs is unclear to us.

Okay so it’s not that they’re consolidating stores and closing stores, it's that they don't know when they're going to roll out their new spending plans?

Well, I guess that comment is focused on those growth opportunities we do see. There are companies like [indiscernible] stores, Subways investing outside of North America. So there are some -- some of national changes have been big customers in recent path, don’t seem to have anything on horizon. However, there are other that do have opportunities we're pursuing those it's the timing of those opportunities that’s is unclear.

Got it, okay that’s helpful. And then I wanted to just drill down a little bit more on the hydraulics business, you've talked about entering a new markets and --.

Thank you for us hydraulics, the hydraulics presence [ph] will be appreciated of the interest.

Everybody has talked about every other segment, so I figured and you know I am not going to drill down on Food Service because that's doing terrific and you're doing a great job. I wanted to just better understand you've talked about getting into new markets and specifically you’ve mentioned airlines support equipment, can you talk more about that and who are the competitor that you're see in that market?

Well, it's so much fragmented, there are a lot of smaller players in custom hydraulics and if you imagine the kinds of specialty vehicles with let’s say scissor lifts to bring food and concession up to -- to raise them to the door during the plane changeover, we'll provide the hydraulics to those scissor lifts. So customer like JBT that makes equipment like that.

So you'll supply the hydraulics to John Beans?

Yes.

Got it, okay. And right now they're probably sourcing those from somebody else, correct?

That’s right.

Your next question is a follow-up question from Sean Williams of BB&T Capital Markets.

Just I wanted to make sure we're not minting words on the Engineering Tech outlook as we move into the next quarter here, so just I’m crystal here you're looking for mid-teens margin in that segment and you're talking about year-over-year growth on an absolute basis?

Yes, so let me leverage on that a bit something, the mid-teens margins -- the one cap that we put up there is the potential timing from the Space shipment, these things, these large domes and you've seen them, if they can ship a quarter or two. We have shipments scheduled in May and June, if those go out mid-teens, I think the last time we talked about 15% in the quarter that it will be highly dependent on the shipments of Space domes. However, we're confident that double digit margins in any case and absolute growth year-on-year.

So absolute growth year-on-year, I mean that implies, I mean $5 million to $6 million ramp in June versus March, I just want to make sure, I mean that seems quite extraordinary Jimmy, I mean to that more tied to starting up in Wisconsin is that more tied to these rocket delivery, so can you just kind of me help me out there?

It sounds -- its space shipments and aviation ramp, so the Wisconsin title made some contribution, but that would really be making their first shipments in June. So this has more to do with the ramp up of the existing aviation contracts, ramp up in Enginetics and in Space project.

Okay that’s helpful and then is there any risk in our mind on that ramp up within Wisconsin, everything’s as planned, as we sit here to today?

I’ll tell you what we have a backup plans and so if we have problems with our plans, we have outsourcing partners, we can continue to meet customer need. So we’ve got customers protected and off-course that means our top line commitments will be meet, but that -- the outsourcing will be at a higher cost. So from that standpoint we got deliveries well scheduled we’re confident in that, for the moment the ramp up is going well, we think it’s been well manage, and you were on track to produce in June.

Okay and then coming back to engraving, I know that the organic growth there is so quite good, although it is decelerating quite a bit 30% organic last quarter, now clearly [ph] it’s kind of double digit in dilute [ph], with double digit. And I just want to make sure I understand, I mean is there anything, is that just kind of law of large numbers, you are coming up against tuff comps there, I just want to make sure, you did kind of highlight some slowing in Southeast Asia as well as kind of watching the Chinese automotive market, is there -- I just wanted to make sure that there is nothing that we should be -- maybe keeping an eye on that’s decelerating within that business?

No would be the short answer to that question. In the past we communicated our expectations for grow in this business is your 5% to 7% and we have continuously exceeded that in the past. So we look at the market indicators, the new model roll outs and refreshes, which support that 5% to 7% and I think that’s -- we think that’s are reasonable number. Now we do have some growth initiatives out there to the extent we’re able to grow with nickel shell that’s a new source of revenue for us. Laser engravings are at a higher price point than chemical etching, so as that becomes a bigger part of the market, just maybe some growth from there. It’s a little early for us to revise our expectations based on those initiatives so, I mean that 5% to 7% numbers, is the safe percentage.

Okay then you called out some startup costs in that unit. I don’t know, can you quantify may be how much that impacted the margin because on a year-on-year basis margins, we’re down to 130 basis points, I don’t know if all of that 130 basis points, the startup is it some portion of it.

Yes, just shy of $300,000 to $400,0000 of startup cost and what these are our initiatives the laser engraving and in fact in recently earnings release we talked about the investments we’re making in laser in North America and China and the laser sales this past quarter in North America was very, very slow. It was for commission a machine without the cost in the revenue, and putting in place nickel shell in Detroit and to have -- their revenue was started this quarter, and we also have fully staffed design [indiscernible] in Detroit. So these are American North investments, were we’re taking the growth initiatives that have been successful in Europe and building that maintain in North Americas. Albeit based on the success, we’ve had in Europe, based on the discussion we’ve having with customers in North America that this is the timing issue, the ramp of this new offering. Let me comment in on the margins too because, we often get asked about the margin. What’s the margin expectations for engraving and you think that quarter is in the 20’s and mid-20’s and I think over time, we’ve said regional expectations, upper teens, lower twenties depending on the quarter and phasing of the projects we get.

Right, that’s very helpful, I was wonder, do you happen to have the backlog numbers, are able to give us to us today?

[Multiple Speakers] So Food Service 38 million basically in backlog, and that’s to be delivered in both the year and beyond the year [indiscernible] and in Engraving 18.5, Engineering Technology is 86, Electronics is 43 and Hydraulics is 5.7. So it’s a 192 versus 204 last year, but there is some lumpiness in there that again we even say in our Q that this is not a quarter indicator, this is -- backlog can be very lumpy.

Yes, I understand, this is for housekeeping, first quarter of the year.

You'll get later to that.

Your next question comes from John Cummings of Copeland Capital.

I have two more questions on engineering technology segment, first can you guys just give us a sense of the potential size of your aviation business in that segment in terms of revenue year over next few years as these new contracts ramp up? And the second question is just on the oil and gas part, what gives you the confidence that part of the segment is bottomed and if you could remind us specifically what end market inside oil and gas you're depended on and what has happened there so that business to turnaround?

I just differ that to previous communication we've had about the size of some of your awards that we won in the last couple of years. The lift scan and the plug-in nozzle, and the [indiscernible] awards that all total -- the press release we had the value putting the press release in its $13 million to $15 million add all those together. We had in the last earnings release we said we believe the market we serve has into 2020 they keep a CAGR 7% growth, but we haven't put a number out there of what we think this aviation business can grow to. Obviously we have planning assumptions internally, but we haven't communicated that. I guess we'll have to look it at time or think about in the future how we set expectation because we remain very bullish about that, about the segment and becoming a more important suppler to the ski customers. On oil and gas where I’m confident or not, over $800,000 or something a quarter, so it's doesn’t have much farther to drop, so I think there is some MRO business, some additional parts for installed products industry, although we anticipate continuing to get some of that. So that's where I come from and say it will bounce along the bottom. So the products that we delivered we have two applications, out of our UK plant we delivered shins [ph] that part of our warning system on platform. That business, we're skeptical, if that comes back that will be long growth term because that is more expensive source of oil. In North America, we saw the energy market [technical difficulty] own into land base turbines, either you in oil and gas compression and distribution those sort of midstream investments.

At this time, there are no further questions. I would now like to turn the floor back over to Mr. David Dunbar for any additional or closing remarks.

Thank everybody for your interest in Standex. We think it will be confident with working on the right priorities and pleased with the operational progress we see in a business and look forward to following up with next quarter. Thank you.

Thank you. This includes your conference. You may now disconnect.