Roger Fix – President and CEO Tom DeByle – CFO

Gerry Heffernan – Lord Abbett and Company

Good morning and thank you for joining us. Please note that our first quarter financial results news release which we issued earlier this morning is available on Standex’s web site at www.standex.com.

Also available on our website is a presentation that accompanies our remarks this morning. Please go to the presentation section of our investor relations website to view the slides.

On this morning’s call, Tom will begin with a review of our first quarter financial results then I will follow with an update on our operating groups. After that, we will be happy to take your questions.

Let’s start now with our financial review, Tom.

Good morning everyone. Thank you for joining us today.

I’ll start by reviewing our safe harbor passage on slide 2. Matters we are discussing on this 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 our 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; nonGAAP income from operation; non-GAAP income from continuing operation; and free cash flow. These are non-GAAP financial measures and are intended to serve as a compliment to result provided in accordance with the accounting principle 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 non-GAAP financial measure to the most directly comfortable GAAP measures is available in Standex’s first quarter news release.

Now, let’s turn to slide 3 in our quarterly results. We performed well in the first quarter delivering good top line grow and a substantial improvement and profitability.

For the first quarter of fiscal 2009, net sales were up 2.9% to $180.7 million from $175.5 million last year. This increase was driven by growth at our food service, engineered products, and engraving groups.

Turn to slide 4, please. First quarter income from operation on a GAAP basis was flat at $10.8 million compared with the same period last year.

Our first quarter income from operation this year includes a $4.3 million pre-tax restructuring expense related to the closure of our Bartonville, Illinois ADP facility and two engraving facilities that we discussed last quarter. The $4.3 million include severance and other employee benefit termination cost and expenses associated with the relocation of production capacity to other company facilities excluding the charge, non-GAAP income from operations group 39% to $15.1 million in the first quarter of fiscal 2009.

This represents an increase to 8.4% of sales compared to 6.2% of sales in the first quarter of fiscal 2008. Interest expense for the quarter was $1.7 million compared with $2.7 million in the prior year.

First quarter net income from continuing operation, as you can see on slide 5, with $7.1 million or $0.57 for diluted share, up 33% as compared with $5.3 million or $0.43 per diluted share in Q1 of fiscal 2008. Net income from continuing operation, excluding the tax affected restructuring charge as well as the $1.1 million benefit for life insurance policy from a former executive, was $9 million or $0.72 per share.

This compares with $5.3 million or $0.43 per diluted share from the first quarter of fiscal 2008. Our 2009 first quarter net income from continuing operation reflects the tax rate of 27.6%.

This compares with the tax rate of 36.1% in the corresponding quarter of last year. The difference from the tax rate primarily relates to the previously mentioned insurance benefit which is non-taxable.

Net income in the first quarter of fiscal 2009 was $5 million or $0.40 per diluted share. This compares with net income of $5.9 million or $0.48 per diluted share in the first quarter of fiscal 2008.

Net loss from discontinued operations was $2.1 million for the first quarter of 2009 versus a loss of $605,000 in the prior year. Net income for the first quarter of fiscal 2009 includes a restructuring charge and insurance benefit I have previously mentioned, as well as a $3 million expense charge to discontinued operations related to the environmental or mediation activity in Cleveland, Ohio.

As a result of our Q3 results for fiscal 2008, we recorded that the US EPA has demanded Standex participation in the re-mediation activity at a site located in Cleveland, Ohio where the company leased a building and conducted operations from 1967 until 1979. This site is the former location of the Club Products and Monarch Aluminum division.

The company sold these businesses in 1984 and as a result, they are considered discontinued operation. I would like to provide you with a brief update on the environmental remediation activity.

The project management firm hired by the company, which is an expert in environmental remediation program, has been at the Cleveland site for the past several months and executing the remediation activity that Standex has agreed to with the US EPA. As a result, we know a lot more about the extensive contamination and the anticipated cost to complete the remediation than we did last quarter.

Based on our latest testaments, we have increased our accrual for this remediation activity by an additional $3 million expense, bringing the total accrual to $5 million pre-tax. This is our best estimate of the cost anticipated to complete the remediation.

However, the actual remediation activity will not be completed for approximately another two quarters and therefore our estimated cost cannot be considered final. We mentioned last quarter that we had put several insurance companies on notice that have provided general product liability coverage to Standex during the years in question.

During the first quarter, two of the insurance companies agreed to reimburse us for legal expenses incurred during the remediation process under the normal reservation of rights clause, thus far they have not agreed to indemnify Standex to cover the cost of remediation. Turn to slide 6 please.

First quarter of fiscal 2009 EBITDA, included the restructuring expenses and life insurance benefit I previously mentioned, was $15.7 million in the first quarter of fiscal 2009. Excluding these expenses and benefits, adjusted EBITDA increased 24% to $18.9 million.

We have provided a reconciliation of EBITDA to net income in our press release. In slide 7, you can see that our free cash flow was $2.5 million for the quarter.

Excluding the pre-tax $4.3 million restructuring charge and $1.1 million life insurance benefit, cash flow was $5.8 million compared with $14.6 million in the prior year. The working capital use of fund on the free cash flow chart of $12.5 million primarily relates to increases in our working capital during the third quarter.

As you recall, we drove our network and capital to very low level at June 30, 2008. The normal replenishment of inventory and subsequent payments to our vendor is the primary cost for the increase during the quarter.

Turning to the balance sheet in slide 8, networking capital was $135.8 million at September 30, 2008 compared to $129.3 million at September 30, 2007. We define working capital as accounts receivable plus inventories plus accounts payable.

Working capital turns decreased slightly to 5.3 turns from 5.4 turns in the prior year quarter. Our net debt which we define as short-term debt plus long-term debt less cash increased to $115.3 million at September 30, 2008 up from $106 million at June 30, 2008.

The company’s balance sheet leverage ratio of net debt to capital was 34.4% at the end of the quarter compared with 32.2% at June 30, 2008. For the first quarter, depreciation and amortization expense was $4.2 million, essentially flat with the prior year.

Capital expenditures during Q1 totaled $1.9 million. Before I turn the call over the Roger, considering the current status with the financial market, I would like to say just a few words about our liquidity.

Please turn to slide 9. We have spoken with all of our banks and our revolving credit facility as well as all of our private placement holders to assess their current financial condition.

Every firm in our bank group and our entire private placement holder are rated investment grade. In mid-October, $29 million related to our private debt came to and we have refinanced the debt into our revolving credit facility.

We have approximately $29 million of capacity under our $150 million revolver as well as two lines of credit of $10 million which the company believes to provide adequate liquidity in the near term. Historically, we have placed approximately $40 million to $50 million of our total debt in private placement debt instruments.

Our current plans are to continue to monitor the debt market in order to allow the pricing environment to potentially become more favorable to the company. So with that, I will turn the call back to Roger and you can turn to slide 10.

Thanks Tom. We began fiscal 2009 on a very positive note with solid performance in the first quarter.

We are particularly proud of our 69% increase in non-GAAP net income from continuing operations. We believe these results represent very solid execution on the part of our business units in the faces from very challenging market conditions particularly in the US housing and off-road heavy construction equipment market.

The increase in operating income was the result of implementation of price increases, the successful completion of several plant consolidations, cost reductions, and productivity improvements achieved throughout the organization. We have also been able to consistently grow organic sales.

Our operating groups, even though in the throws of a down market, had done a good job of entering new markets and driving market share gains. Our success for the past several years is a testament to the strength and resiliency of our business model.

Our goal is to rely on this resiliency to outperform the market and what promises to be a challenging year from a macroeconomic perspective. Let me take you to how each of our operating groups performed in the quarter and discuss what we see ahead of us.

Let’s start with food service and you can turn to slide 11. Food service equipment first quarter revenues increased 4.9% year-over-year.

The growth was driven primarily by sales of our walk-in coolers and freezers. First quarter operating income was essentially flat.

Flying sales growth is the result of number of sales mixed issues. First, as I mentioned, we had good sales of our walk-in coolers and freezers.

However, we saw a less volume in our food service reach-in cabinet and sales into scientific market which carry a higher margin. In the first quarter a year ago, we completed a large project with the USDA for refrigerated walk-in enclosures which did not repeat in the current quarter, as a result, negatively impacted our scientific sales volume.

In addition, we have a lower proportion of sales at our Cooking Solutions group compared with the Refrigerator Solutions group. The hot side typically carries higher margins than the cold side.

On the hot side, we saw some weakness in the casual dining and independent pizzeria markets. In addition, some orders were pushed out from the first quarter to the remainder of the fiscal year from a major quick service restaurant chain customer on the hot side of the business.

I like to note that we have completed transition of management in the Cooking Solutions group from the previous owners to Standex management and have appointed a new group president. We are quite pleased that we have been able to recruit several talented and experienced individuals from other blue chip organizations in the industry to lead the Cooking Solutions group.

On previous calls, I have mentioned our strategy to expand the presence of the food service business internationally. During the first quarter, we have experienced good growth in our food service equipment international sales achieving both exports and sales from our international sales and manufacturing locations.

In fact, the international sales grew 29% over the prior year. Most of the gain came from the success of the refrigeration group in Canada that we have discussed in prior calls.

Our Cooking Solutions group also is successful expanding internationally with improvement in Latin America and Lima. Going forward, we will continue to focus on achieving market share gains as we face a softening market for food service equipment in fiscal 2009.

We will continue to focus on international expansion including geography such as South America, Latin America, Canada, and the Middle East. We also plan to introduce innovative new equipment and launch product adaptations from new applications during the year.

Looking at the bottom line, we are taking every opportunity to cut cost and enhance margins. For example, when the process of rebidding our entire freight program which we believe should realize savings in the range $1-1/2 million to $2 million cost in the entire Standex organization.

We also hope to benefit from the recent reduction of the cost of commodity materials such as carbon steel, stainless steel, and aluminum use by the food service group. Turn to slide 12, please.

Engraving group sales grew by 5.7% year-over-year driven by sales growth in our North American operations. Our aggressive efforts to consolidate facilities, enhanced productivity, and reduce cost resulted in operating profit growth of 91.2% for the first quarter.

Specifically, we successfully completed the consolidation of two smaller roll engraving facilities in North America into our Richmond, Virginia plant. We accelerated the introduction of lean manufacturing and other management techniques to dramatically improve productivity and reduce overtime.

We have also taken every opportunity to decrease cost throughout the organization. Management in the engraving group really pushed the cost side of the equation this quarter to achieve this very impressive bottom line growth.

We saw a steady sales volume in North America and exited the quarter with good backlog orders, giving us reason for optimism about the nearterm prospects for the business. While we have begun to see some platforms delays from our international OEM customers, we are continuing to execute on our strategy to secure growth in non-automotive applications and emerging market such as in Turkey and China.

Turn to slide 13, please. Our Engineered Products Group led top line growth in the quarter with revenues increasing 15.8% year-over-year, primarily due to a very strong growth at Spincraft, operating income increased by 6.6% year-over-year, operating income like sales growth due to two factors; first, each quarter in fiscal 2008 included milestone payments related to a long-term contract with an aerospace customer.

These payments have been completed, resulting in a difficult comparison in the first quarter of 2009 and will similarly affect each subsequent quarter for the remainder of the fiscal year. To a lesser extent, our year-over-year operating income was affected by unusually high level of low margin product sales.

During the quarter, we also secured new contracts for the Boeing, Delta IV, and Lockheed Martin, Atlas V heavy lift rocket programs for hardware to be shipped through calendar year 2012. Looking at electronics business, revenues were essentially flat.

We continue to capitalize on good demands in the industrial and aviation and aerospace markets and we have benefited from sales from our BG acquisition. On the other hand, we also continue to see softness in the housing sector and experience exhilarating weakness from the automotive sector.

We do not expect the order flow from the automotive sector to pick up in the near term as many EOMs are shutting down factories for extended periods of time for inventory corrections. We saw a good operating income growth from electronics despite the flat sale due to our cost reduction initiatives such as material substitutions, the increase use of low cost manufacturing in Mexico and China, and plant consolidations.

On slide 14, we discussed the Hydraulics Group. Hydraulics Products Group revenues for the quarter declined by 7.5% year-over-year and operating income declined by 1.9%.

The downturn in the US off-road heavy construction vehicle market continued during the quarter. During this period, we are seeking opportunities for growth especially in international markets.

For example, on our last call, we discussed our decision to create a new manufacturing capability in Northern Tianjin, China to produce telescopic hoists for sale in China and for export to other Asia Pacific markets and Europe. Initial prototype launch will begin in the current quarter and we are on track to begin early production in the second half of the fiscal year.

We expect to ship our first order from China in Q3 to Europe and anticipate profitability resulting from the facility in fiscal 2010 and beyond. On the cost side over the past several quarters, we made significant investments in automation equipment that we installed during Q2.

We expect this initiative will contribute to margin improvement beginning in the second half of the year. Turn to slide 15, please.

Air Distribution Products Group sales were down by 13% as a result of the continued severe downturn in the residential construction market. Looking at the top line, we believe that we are achieving market share gains even in this very difficult environment.

We are outperforming the market and we know that we have penetrated new major HVAC wholesalers in targeted geographies. The very good story at ADP this quarter is a 683.9% year-over-year increase in operating income.

This dramatic improvement in profitability was primarily the result of price increases totaling about 32%, which were implemented in the past few quarters that have not yet been offset by a higher material cost. Our continuing action to reduce cost also contributed to the operating income increase this quarter.

During the quarter, we successfully consolidated the sales and production activities of our Bartonville, Illinois facility into our Minnesota and Georgia ADP locations with minimal customer disruption. We are on track to begin realizing annualized cost savings of approximately $2.2 million pre-tax in the current second fiscal quarter.

We’re pleased with our bottom line results this quarter at ADP. This is obviously not sustainable throughout the year.

We expect the group to operate profitably in the second quarter as we continue to consume the lower cost metal we currently have in inventory. However, we expect to be focused on maintaining breakeven profitability in the second half of fiscal 2009 as we begin to consume the higher cost metal that we currently have on order.

Let us turn to our summary on slide 16. For some time now, we have faced protracted and severe headwinds on the housing and off-road heavy construction equipment markets.

During this time, we have been able to grow sales and profitability in the overall business. Our recent successes, especially our ability to enhance margins and drive either growth demonstrate the strength and resiliency of our business model.

And certainly, our ability to generate cash and reduce debt demonstrate a type of performance we can expect from our portfolio over the long term. Going forward in fiscal 2009, we expect to face challenges from a softening economy.

We are not in position to make specific forecast on each of the markets that we serve as Standex, like most companies in the US, is faced with a very dynamic set of market conditions. What I can tell you is that in light of this market uncertainty, we are taking prudent and aggressive action towards the management of our cost and cash.

I won’t repeat myself by going through each business. In general, however, there are several actions we are taking that kind of cross most of our operating groups.

On the cost side, we have a keen eye on improving our cost position through lean manufacturing, low-cost sourcing and manufacturing, plant consolidations, and investments in automation. Each one of our operating groups is also making targeted workforce reductions.

We also plan to drive market share gains of each of our operating groups through the introduction of innovative new products and by expanding our geographic presence. In most cases, this includes penetrating new international markets.

We look forward updating you on our progress as we move to the year, I will now turn over to your questions. Operator, please.

Hey, Roger, this is Gerry Heffernan and how are you doing?

Good morning, Gerry. Gerry, how are you?

Good. Hey, could you – I know that you addressed this a little bit, but if we can just, in any aggregate, address free cash flow and I appreciate the liquidity base that you had in the presentation, but – it is a little smaller this quarter, certainly working capital needs took away from that somewhat, but what are your plans for free cash flow?

How do you foresee the fiscal year 2009 pointing out in that regards? Let us just say – just a harvesting cash paying down debt period, or do you work other things in there?

Right now, we don’t have a very aggressive position towards acquisitions. From our press releases, we completed a small acquisition, BG Labs, during the quarter, took a couple of million dollars of cash.

I don’t think you will see us take on large acquisitions or maybe some small build on [ph] tuck-in type acquisitions. So, from cash utilization standpoint, I think predominantly, we will be using free cash flow to debate on that point one.

Point two, our first quarter is typically our weakest quarter from a cash flow standpoint. We come up of high sales and activity in our Q4 and tend to restock and put more money back on the balance sheet from an inventory and receivable standpoint.

There is nothing in our inventories that would suggest that there is an aging problem or anything like that, just a normal fuel restocking with that cash flow ultimately come back off the balance sheet as well. So again, I think, they will see us predominantly in a debt payment standpoint.

I think that a point I would make is that our Q4 from a free cash flow was exceptional. We really made a significant move in reducing working capital.

That kind of performance cannot be repeated year-over-year, so I would look at our normal EBITDA type of performance as an indication of where our operating cash would be going forward.

Okay, thank you for that. In regards to inventory, I’m thinking raw materials working process stuff here, the air distribution products, I know that you’ve been trying to raise prices there and I know that some competitors have fallen by the way-side, I guess, it appears that competitors have followed with you now on the price increases, is that correct?

Yes. The market in general statement, put in a series of price increases starting more in the March time frame and continuing through the June-July time frame.

Most competitors actually put in, at least two, if not more, price increases during that time frame as they saw there the cost of a metal purchases accelerate very, very dramatically and at this point in time, the market has basically maintained those kinds of prices.

Okay, now, certainly, the steel companies have come out and I am talking about dramatic drops in the price of steel products and certainly, you guys uses specific grade of metal or aluminum for what you are doing but it’s a little bit surprising you commented to hear that you have to go through higher cost raw in the second half. I would have thought you were doing that now and that we’d be looking ahead to the second half for lower price.

Why am I…?

Good question, there is really two issues that we need to discuss to explain that. First of all, the general statement, we order or procure all of our galvanized steel that we use in ADP from international mills.

We are large enough user of galvanized steel that we can go direct to mills. Most of our production for example is actually purchased in India, China, and a little bit from Japan.

Because we go to the mill, the lead times on that product are very long, anywhere from 3-1/2 to as much as 5 months. The second issue is that, over the last year, we have been faced with the declining sales volume.

We have not adjusted our procurement activities as rapidly as our sales have declined. So what happened was in the last six months, we find ourselves in a situation where we had some significant qualities of metal and the good news is we had purchased that prior to when the cost of galvanized have run up.

So we had a relatively high level of pretty low cost materials as compared to what current market prices are. Again, as we look forward, we are faced with that same four to five month lead time.

So as the metal run up, we had to make some purchases at those higher levels. Those materials are still in the mail or on the water headed towards us.

So because of that four or five month lag, we will see those materials hit us and go to our PNL so to speak, to our plants in the second half. Now, you are correct in saying that is a general rule, we are seeing beyond that next five or five months of deliveries, softening of demand.

We think we have done a reasonable job of being able to buy selectively so that we are not going to experience the very peaks that the steel galvanized that went through over the last several months and obviously then as we look into the first part of fiscal 10, we would see the benefits of what is now appears to be a pretty softening market for galvanized steel. I apologized for a long-winded response, but it is all about the length of lead time of our job purchases and the fact that we had a good quality of low cost material on hand currently.

Okay, now you have put through the price increases and the customers saw the news items about the rising cost of steel. Why aren’t they go into – look at the papers and say hey steel price is falling.

Give me some of that price increase back which put the kind of buying for you guys because you haven’t had the hard price stuff delivered yet.

I would say two things there. First of all, the market price is up because our competitors are in fact faced with using higher cost material and so I think at least in the near term, you can expect that the competitors in the market price of those have.

And secondly, I mean, obviously, it would be a point of discussion with our customers, but we will also have to point out to the fact that, over the last 12 months, the business is basically breakeven and so I don’t think we need to make apologies for the fact that we made money in one quarter.

Okay, from this point on, would you be willing to continue to accept lower volumes to maintain price?

We are really not taking on lower volume. We have actually – if you compare our real unit volume which excludes price, our real unit volume was down on 27% to 28% in the first quarter.

The market having to start was down around 33%. So, the way we look at both our sales in aggregate which has been dumps I just mentioned to you and also look at the specifics of where we know we have penetrated new accounts.

We believe we are actually performing better than market taking market share.

Okay. In the food service equipment, I was wondering if you could just give us a little bit more discussion on the softening food service equipment market that you speak of.

What did you see as you were talking to customers through the month-to-month of this last quarter and of course any discussions that we begin to relate to us regarding the fourth month in October? What is going there?

It is really a mixed bag Gerry. I don’t mean to be invasive, but it runs the gamut – first of all, our large customer business as you know runs the gamut from drugstore business where we are heavily engage with say customers like Walgreen and CVS.

The latest I have seen on Walgreen’s in their public filing is that they are maintaining a pretty steady projection for new store openings and that sort of 150 stores a year range. So that seems to be reasonably steady.

Some of the smaller chains, Bender for example has indicated that they plan to reduce their new store openings, but that is a relatively small piece of what we do. As the general statement, I think the large chains which have goals and objectives that require them to open certain number of new stores, they have a pretty long pipeline were they have – the real state people for example outdoing the frontier work, looking for new sites either purchasing property and/or leasing properties then they turn that over to operations folks to do the startups.

If you go back into the 2001-2002 time frame, which is the last downturn in food service, I think you will see that the large chains were the last two to go soft and the last to come back out. The smaller chains, the Mom and Pop, one or two single store locations tend to react more quickly.

I think that what we saw in that pizzeria segment that was tend to be outside, let’s say, young were obviously the pizza is a large player. A lot of that market is still, if you will, Mom and Pop proprietary kind of folks and they obviously reacted more quickly.

So again, it is really mix right now, all the way from some chains actually say they are going to continue or actually increase to other chain saying yes in the long term or in the medium term will going to be turning down our billed account.

Okay, just, for I guess for clarification. Is that decidedly more cautious than the way you read into your customers when we spoke last in July?

Not really. No.

I think we have seen a more cautionary trend developing over the last 9 or 12 months perhaps as people were looking to general economy. But if you are referring to the liquidity crisis, etc.

that we have seen in the last few weeks, so I think it is too early for our customers to be making any general statements about that, but obviously, we are concerned it is going to moderately not going forward.

Okay, I will get off now. Thank you.

Thanks Gerry.

We thank you all for your participation. We look forward talking to you again next quarter, thank you.