Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Standex International's Fourth Quarter 2016 Earnings Call. [Operator Instructions] It is now my pleasure to turn the floor over to Matthew Roache. Please go ahead.

Thank you, Maria. 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 fourth 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'll turn the call over to David.

Well, thank you, Matt, and good morning. We made progress operationally during the quarter as we continue to face top line challenges in Food Service and Engineering Technologies. Sales in Engraving, Electronics and Hydraulics all increased. For Q4, overall revenues declined 3% to $193.8 million, with foreign exchange having a negative effect of 0.5%. On the bottom line, while the operational improvement initiatives drove 180 point year-over-year gross margin improvement, operating income was down 21%, due to a $7.3 million pretax charge related to the divestiture of the U.S. Roll, Plate and Machinery business. GAAP EPS was $0.94 per diluted share, and adjusted EPS grew slightly to $1.31 a share. We had a net cash position of $29.9 million at the end of Q4. We achieved strong performance in Engraving, Electronics and Hydraulics, and we expect the positive trends in these segments will continue. In each of these segments, we are capitalizing on demand from traditional markets while driving growth in new markets. In Engineering Technologies, top line challenges are continuing from oil and gas end-market weakness while we reposition the business to serve opportunities in the commercial aviation market. I'm pleased to report the business generated a 16% EBIT margin in the quarter as we align expenses to near-term demand. In Food Service Equipment, small footprint retail and key chain accounts of Refrigeration continued to be soft, and had a negative effect on the group overall. Slide 4 gives a brief overview of our financial progress and key milestones in fiscal year 2016. Despite lower sales, operationally, we performed well. GAAP EPS was $4.09, down 5.1%, with adjusted EPS up 0.7% to $4.59 as a result of our operational improvement initiative. We delivered excellent free cash flow conversion of 121%. Engraving, Electronics and Hydraulics all delivered strong years in sales and profitability. Food Service delivered 130 basis point improvement despite the top line reduction. Our acquisition of Northlake is performing well in supporting the Electronics business opportunity. We divested the U.S. Roll, Plate and Machinery business to devote full focus on opportunities in our mold and service texturizing business. Finally, we have begun production in our new Aluminum Center of Excellence in Wisconsin, delivering lipskins to Airbus. I'll touch more of our achievements in each business when I go through our segment review. First, Tom will review our fourth year and year-end results. Tom?

Slide 5 shows our historical trend of earnings per share and sales. GAAP sales were down 2.7% versus fiscal 2015. GAAP EPS was $4.09 versus $4.31 a year ago, due to the impact of the divestiture of the Roll, Plate and Machinery business, hereafter referred to as RPM. On an adjusted basis, sales were down 3.1%, and we delivered EPS of $4.59 versus $4.56 in fiscal 2015, a 0.7% increase. We will continue to bridge out the divestiture of the RPM business going forward to help a reader understand the impact on a non-GAAP basis. Please turn to Slide 6, which details our revenue changes by segment. You can see that 3 of the 5 segments reported positive organic sales growth for the quarter and full year. The acquisition of Northlake contributed 1.5% to the sales growth for both the quarter and year, while foreign exchange was a headwind in those periods. Please turn to Slide 7, which summarizes our fourth quarter results on a GAAP and adjusted basis. During the fourth quarter, gross margin increased on a GAAP and a non-GAAP basis despite the drop in revenue. Adjustments from GAAP to nonoperating GAAP -- operating income were $8 million and are itemized on the bridge on the following page. The GAAP tax rate of 13.9% in Q4 of FY '16 is due to the impact of the RPM divestiture along with the charitable contribution of vacant real estate and the mix of U.S. to foreign income. Please turn to Slide 8, which is a bridge that illustrates the impact of special items on net income from continuing operations. Special items included the impact of the RPM divestiture, restructuring charges and a pretax loss on sale of real estate to the charitable organization. GAAP net income was down 25.9% as…

Thank you, Tom. Please turn to Slide 16, and I'll begin our segment review with the Food Service Equipment Group. Sales decreased 9% from Q4 last year, driven primarily by the continued softness in refrigeration demand as well as ongoing actions to eliminate less profitable products. We continue to make significant progress operationally as gross margin increased to 250 basis points and operating margin was 11.4%. Refrigeration sales decreased about 20% in the quarter as the result of continued soft sales to large national chains, dollar stores and drug retail stores. Strong sales through dealers partially offset the overall revenue decline. On the positive side, we are beginning to see some of the large national chains ramp up their investment plans for projects set to commence in 2017. In light of customers' reduced spending, we are aggressively driving lean in our Refrigeration plants and managing its cost structure. I have to commend the Refrigeration management team for giving their best efforts to protect the business's profitability during the sales downturn. In Cooking Solutions, revenue increased mid-single-digits year-over-year, primarily driven by sales through dealers. We saw a good growth from Ultrafryer in traditional cooking equipment and slower growth in grocery store retail. This was partially offset by actions to eliminate lower-margin commodity products. What is particularly noteworthy is the 500 basis point year-over-year increase in cooking operating margins despite about $1 million in lost sales from the product rationalization strategy. The margin improvement was aided by improved operating performance, stabilization in our plants and select price increases on lower-margin products. Specialty Solutions was up in Q4, driven by our espresso pumps business, partially offset by exchange rate declines. We're particularly excited by new pumps products that will provide our customers with opportunities to offer innovative carbonated beverages, enhance CO2 safety and…

[Operator Instructions] Our first question comes from the line of Chris McGinnis of Sidoti & Company.

Can you just maybe start a little bit -- just maybe dive a little deeper into the decline on Refrigeration and maybe a little bit of the -- you have a sense of a couple of more quarters here of softness, then maybe it comes back in the back half of the year. Can you just maybe give a couple of clues around bridging us to that kind of return to positive growth, is it more of the customer base? Or is it a combination of maybe some new product offerings?

The short answer to that last question, it's the customer base. This is the same market phenomenon we've been talking about the last few quarters. And we -- if you just take these products -- look at these end-market customers by category, the drug stores, the small footprint retail, CBS, Walgreens, Rite Aid, which have been so important to the Refrigeration business over the years have really reduced our capital spending in the last quarters, we think largely due to the imminent acquisition of Walgreens of Rite Aid. Once that acquisition is completed, Walgreens will know which stores they will have in Rite Aid, which ones they would need to shed, presuming there will be some changes, and then they will begin their investment plans. We see other drugstores holding off a bit on their CapEx. Now we believe that's also waiting to see what happens with that investment. We're talking with all of these companies about rollout plans, they do plan to invest and the timing will be a question we think of these of the M&A activity. For the national QSR's, last year we talked about McDonald's and Subway, Dairy Queen, Dunkin. Now Tom DeByle and I have been out in the last few quarters meeting with our business and meeting with customers, and I can tell you that those customers are preparing plans to begin spending in North America. We think that will start in 2017. McDonald's a year ago was more concerned with increasing their same-store sales. They've had some success. They're ramping up their investment plans as a Subway and other national chains. So I'm confident that will begin to ramp up again in 2017. And the final big element for us is the dollar store in the M&A front. Family Dollar was a big account for one of our brands, and we have not -- we had very little business in the last few quarters. The contract for the combined entity will be competitively bid in the coming months. We're competing for it and that will be 2017 volume. So of those -- the first 2 categories are really market phenomena and declines in customer spending, the third is the M&A space has affected our relationship, and we're working to get back into the corporation.

Sure. And then it's been a little while now, can we maybe just talk a little bit about maybe your new product rollout helps stimulate demand. And do you think that could be a driver in 2017? Or is that maybe a little bit more dated?

Well, new product rollouts in the other Cooking -- in the other Food Service businesses for sure. In Cooking, we have a couple of ovens, we've got good momentum of our combi oven, our speed oven is out and ramping up now. And our Specialty Solutions business rolled out a new Italian-style display case which was well received at [ph]. Our specialty pump business has a couple of new applications that I mentioned. We had an image in the presentation. So in all those fronts, new products will drive growth. In refrigeration, the biggest impact is the customers turning on their spending again.

Sure, sure. And then maybe just on the Engineering, I think last quarter you were thinking that this quarter would be positive. Can you maybe just talk about the disconnect there of when, what trans...

Yes, I'll tell you. if you've been following the company for a while, you know that the space business that we serve is a pretty steady year-on-year business, but it's quite lumpy from quarter-to-quarter; and we have some large dumps that were scheduled to ship in Q4, and due to customer schedules and work of their customers, those moved out. So had those shipped, we would have seen the upside. On the aviation shipments, we were where they thought they would be, oil and gas was about what we thought it would be and it was this timing of the space shipments.

Okay. And then I guess just thinking a little bit about the margin profile for next year, obviously, some improvement. I guess, just thinking about the gross margin for next year, should it be in line with kind of the sales pressure you're going to see next year or should it be -- you should still see some positive momentum by 2017?

Well, I think positive momentum sequentially because we think we'd see on the -- that the Refrigeration National Accounts sequentially -- we're close to the bottom on the spending of those National Accounts. The year-on-year comparison, however, will see some pressure on the margins from that. So it depends on which way you model it from -- sequentially or year-on-year. Tom, do you have anything to add that?

I mean, the first 2 quarters are, as we mentioned in the presentation, are going to be a little bit of a struggle.

And then I guess just on the SG&A, it was a little higher than I expected for the quarter itself. Can you maybe just talk -- dig a little bit into that? It was up year-over-year. Is that largely due to the acquisition or ...

It's healthcare and the acquisition primarily.

Our next question comes from the line of David Cohen of Midwood Capital.

I was just wondering if you could reiterate the commentary you had about the tax rate and what led to the relative decline for Q4 versus prior year and what's your expectations are going forward.

Yes. So we had a 13.9% GAAP tax rate. And our base rate is basically 35%. But with the mix of foreign -- our foreign rate is around 23%. And then we had loss on the impact of the Roll, Plate and Machinery business, which has caused the negative 8.2% and then the charitable contribution land sale was 2%. We expect, as we said in the release, to get back to historic norms of about 29% next year, Dave.

And your add-back in your adjusted EPS were at that marginal rate, is that fair?

Yes.

[Operator Instructions] And we have a follow-up question from Chris McGinnis of Sidoti & Company.

Just quickly, you divested something in the quarter on the Plate side, just looking across the business lines, obviously, you have a lot here. Is there a need to kind of prune the portfolio as you see it and make the opportunity there? Can you maybe just talk about that a little bit more?

Yes. We've -- you know, Chris, that yesterday the company -- if you go back several years, we have 12 different businesses. We're down to 5 that we see good potential leads businesses. Our focus is to build these businesses into more significant platforms. The board is -- the board and we are constantly looking at our portfolio to see that we have the right businesses and we're able to put capital to its best use. The projection over the next few years, we see growth opportunities in all the businesses. And when we get asked about different businesses, one of the important consideration is related to the value creation of potentially divesting some these is the tax base that we have which is quite low and our - the returns were getting on the business. So what I would tell you is that the businesses are performing well. We see good future for the businesses. We're not actively seeking to shrink the portfolio for the moment. However, the board has always evaluating the portfolio, and I'd call it an evolving story.

And I guess just on the flip side of that, do you mind talking a little bit about the acquisition prospects that you have in place, or again, in the works or that you -- the things exciting, in what areas would that be in to expand, either geographically or just a product offering or ...

Yes. Yes, sure. We have a quite active, a very active funnel, active and dynamic funnel. And I would describe it the way I had in previous calls, we see -- based on the markets we serve and the fragmentation and the different players in the markets. Within Electronics, we see a high number of opportunities. We see some opportunities in Engraving, opportunities in Engineering Technologies. There are a couple of opportunities in -- even in Hydraulics. And in Food Service as -- we're confident that Food Service business operationally has turned the corner. There's not a lot we can do about customer spending in Refrigeration, but we're managing our costs, managing our margin there. Since we're confident now, we've got our hands on the operational performance. In Food Service, we are beginning to look at acquisitions, acquisition candidates both here in North America and abroad. So I handicap them in that order, the order I just went through them.

[Operator Instructions] At this time, I'm showing no further questions. I'd like to turn the floor back over to management for any additional or closing remarks.

All right, thank you. Thank you for everybody for dialing in and listening in on our call. As we get the business -- we've got 8 P&Ls in the business, 7 of the P&Ls did well to very well and we'll carry that momentum into the next year. In Refrigeration that we talked at some length about the end market phenomenon they're facing, we got a couple more quarters of that, but the work on the margin has been good, you see that reading through. So we remain confident about all the businesses and the prospects. And as we look into this next year, I'll send the tough compares we have at the Refrigeration into national customers. We anticipate the momentum in the other businesses will carry through. And we look forward to reporting to you after this next quarter. Thank you.

Thank you, ladies and gentlemen. This does conclude today's conference call. You may now disconnect.