Roger L. Fix - President and Chief Executive Officer

John [Wathusen] – Wathusen and Co. Michael Gardiner - Wedge Capital Management

Good morning and thank you for joining us. Please note that our second quarter financial results news release which we issued last evening is available on Standex’s website at Standex.com.

As you may have noticed, in an effort to provide you with more detailed financial information in advance of our 10-Q filing, we’ve enhanced the format of our quarterly financial news release. For example, we’ve included the balance sheet, a statement of cash flow and other supplementary financial data.

Before I move into the review of our operations and our financial results for the quarter I’d like to remind everyone that the matters we are discussing on this conference call may include predictions, estimates, expectation 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. I’d like to start with a quick update on our CFO search process.

We’re moving quickly to identifying qualified candidates for this position and have hired one the leading global executive search firms, Spencer Stuart, to assist us with this process. We’ve reviewed a number of resumes from well-qualified candidates with extensive financial management backgrounds and have begun to conduct interviews.

We’re hopeful that the new CFO will be on the call with us next quarter. In the meantime, we have a seasoned financial team who efficiently closed the quarter.

With me today are Sean Valashinas, our Chief Accounting Officer and Dave Ferrara, our Director of Operational Planning and Analysis. Both Sean and Dave will be available to assist us in taking your questions at the end of our prepared remarks.

Turning to the business. Our operations performed well in the second quarter.

Three of our five businesses reported top line growth including double-digit organic growth in our Foodservice Equipment group. Four of the five groups saw increases in operating income, three of which reported at least double-digit growth.

Overall, net sales in the quarter increased 23.7% to $172 million versus $139.3 million last year. The recent foodservice acquisitions added about $25.4 million in revenues in the quarter.

Second quarter fiscal 2008 income from operations increased by 42.6% to $11.3 million compared with $7.9 million in the second quarter of last year. Considering the recessionary conditions which exist in the residential housing construction market and off-road heavy construction vehicle markets, we feel very good about our bottom line performance this quarter.

We grew net income for the second quarter of fiscal 2008 14.4% to $5.5 million, or $0.45 per diluted share compared with net income of $4.8 million or $0.38 per diluted share in the second quarter of fiscal 2007. The difference in the year-over-year increases in operating income versus earnings per share is the result of a low tax rate that occurred in the prior year quarter and higher interest expense in the current quarter due to higher borrowings resulting from the acquisitions completed in the third quarter of last fiscal year.

The second quarter of last year benefited from a low tax rate of 25.1% compared with 33.5% that we recorded in the second quarter of fiscal 2008. This was the result of an adjustment related to the extension of a research and development tax credit that benefited last year.

In addition, operating income in the second quarter of 2007 benefited from a $1 million after-tax reversal of expenses associated with our long-term incentive plan. This contributed approximately $0.08 to earnings last year.

Let’s review each of our operating groups to give you a better sense of how each of them contributed to our top and bottom line performance for the quarter. One highlight of the quarter was the excellent performance by our Foodservice Equipment group, which grew sales 59.2% year over year to reach $94.9 million.

This year-over-year sales increase featured a 17% organic growth rate which is driven by double-digit sales increases across most of our foodservice businesses. As mentioned earlier, the foodservice acquisitions added $25.4 million of sales to the quarter’s performance for this group.

Second quarter operating income growth of 149% outpaced the revenue increase as a result of price increases, cost reductions and improvements in material purchasing and shop floor efficiencies across the foodservice business units. During the quarter, we also saw a dramatic bottom line improvement at our Master-Bilt walk-in cooler and refrigerated cabinet business.

Let me spend a few moments on Standex’s medium-term plan for the foodservice equipment business to broaden our customer base, enter new markets and grow our market share. Through the past several quarters, we have been successful in capturing several large warehouse projects for our walk-in cooler business.

These warehouses are large, refrigerated buildings used for bulk food storage to support central commissaries for institutions and for large food processing facilities. We sold two of these products during the first half of the year through our recent acquisition of Kool Star.

While this type of project business is lumpy, it is an exciting market opportunity for us that we will focus on going forward. It is also an ideal market for us because the type of inflated panel that our Kool Star business produces.

This is an area where we are marketing to foodservice consultants who design and specify the products to be used in these major projects. Marketing to Foodservices consultants has been an area of increase focus for our Foodservice Equipment growth strategy since the acquisitions of AFS and APW last year.

These consultants also are critical in the design and equipment specification of both refrigeration and cooking equipment for large projects such as sports stadiums, hospitals, colleges and other large institution buildings. We’ve also begun to see some success from our strategy to build sales synergies across our multiple sales channels.

One early success we are seeing is in the market for walk-in coolers located in convenient stores. Last quarter we rolled out a new product brand called IntraCool which is comprised of panels manufactured by Kool Star and refrigeration systems built by Master-Bilt.

Because of the cost position we have achieved at Kool Star and Master-Bilt we are able to offer this differentiated product at a competitive price point necessary to penetrate the convenient store market. This is a major advantage for us in what has become more of a commoditized market segment.

We expect to build share in the convenience store end market without cannibalizing revenue from our other walk-ins and refrigerated cabinet businesses. We have also seen early success in leveraging sales across the hot and cold side of the business.

For example, we are pursuing several new business opportunities with one of the YUM Brands restaurant chains. As you may recall, following acquisition of ABW Wyatt, we moved to capitalize on ABW Wyatt’s long-established relationship with the YUM Brand restaurants.

This quarter we presented Standex’s complete suite of refrigerated equipment solution products to the management of one YUM restaurant chain and began quoting and designing several large projects in another chain as well. Our Norlake business has also demonstrated good organic growth over the past several quarters as a result of our efforts to build upon existing and diversify into new US and Canadian Foodservice chains including McDonald’s, Chipotle and Tim Horton’s.

Norlake has also generated very strong sales to the scientific market this quarter due to a large environmental project for the FDA and the continued growth from the sales of specialty reach-in type cabinets offered in leading catalogues for scientific apparatus. As you can tell, we are enthusiastic about our prospects for the Foodservice Equipment group.

Our acquisitions are performing in line with expectations and we are executing well on our strategy to drive sales and cost synergies across the Foodservice businesses. Our [inaudible] group posted second quarter sales growth of approximately 9% as several of the delayed platform products by the group’s global OEM automotive customers in North America began to come online in the quarter.

Operating income for the group was up by 40% year-over-year primarily due to sales leverage and a higher margin product mix. In addition to strong sales to our global automotive customers we continue to be pleased by our ability to grow shares in non-automotive related engraving opportunities in both Europe and North America.

Taking on more non-automotive business enables us to leverage the high fixed costs at our operations particularly when our automotive business is slow. At the same time, macro trends have led to softness at our roll and plate engraving and machinery businesses.

Lower overall capital spending affected sales at the machinery business and the roll and plate business was affected by the housing market crisis. This business produces rolls used to produce home siding, wallpaper, linoleum and decking among other home construction materials.

Turning to the products group, sales were up by 3.6% year over year this quarter. Operating income increased by 31.5% due to sales leverage and a higher margin product mix.

On past calls we have discussed what we see as a significant opportunity with NASA’s Moon, Mars and Beyond program. In the second quarter that opportunity again comes to fruition as we captured and began to recognize revenue for an $8.2 million project for tooling and prototype hardware for NASA’s Orion rocket.

We expect to recognize revenue on this specific project in the fourth quarter and then through the first half of fiscal 2009. On the energy side of business, we are continuing to ramp up production to support the previously announced win of a large multi-year contract from an OEM customer.

We expect this project should continue to add additional revenue growth in the second half of the fiscal year and beyond. We are optimistic about our growth prospects in this operating segment as we continue to see a number of projects on the horizon and across all of the end markets we serve including aerospace, aviation and energy.

In anticipation of contracts we have been awarded during the past 12 months we began installing the necessary capital equipment in our spin craft facilities in Wisconsin and Massachusetts to meet the increased demand. We expect this equipment will be fully operational to help us capitalize on the market demand in the current third fiscal quarter.

[Inaudible] business delivered a mixed set of results with growth in markets such as aviation, aerospace and industrial applications offset by some softness in other accounts that were affected by the downturns in the automotive and housing sectors. We continue to focus on improving the margins in this business through our new China facility, plant consolidations, price increases and cost reductions.

We are optimistic about the prospects for this group as we see continued strength in the aviation, aerospace and energy end markets. At our hydraulics group revenues were down 2.1% year over year while operating income increased by 7.3% due to cost reductions and improved productivity.

We have been affected for several quarters now by the downturn in the off-road heavy construction vehicle market cycle. In addition, EPA rules that went into affect for all engines on class 8 trucks manufactured after January 2, 1007 are contributing to the weak demand environment.

The oversupply of both new and used trucks currently on the market, coupled with lower demand for new dump trucks and dump trailers has impacted demand for our telescopic cylinders in our primary markets in the U.S. Although we are uncertain as to the timing of the recovery of the telescopic hoist market in the U.S., we believe that we are at the bottom of the downturn.

We are also encouraged by the new organic growth opportunities we continue to see internationally, specifically in Europe, Central America, and South America. Our goal is to continue to diversify our revenue base and decrease dependency on the North American market.

We are also pleased with some initial growth opportunities in the Asian market. Already we have secured several new contracts with local truck manufacturers.

For example, we were awarded the project supply for telescopic cylinders for the refuse trucks that will be used to service the 2008 Beijing Summer Olympics. Air Distribution Products group sales were down 17.3% year over year.

They continue to be affected by the recession in the residential housing construction market. There is a great deal of uncertainty in predicting when this market will begin to recover as the industry continues to adjust to an oversupply of both new and existing homes and higher levels of foreclosures.

The result has been that the large homebuilders are dramatically reducing new housing starts in order to correct the current oversupply of homes on the market. In addition, this business is being impacted by very high material costs driven by world supply and demand for galvanized steel.

The significant buying decline and higher material costs increases result in breakeven operating income for the quarter. Right now I would like to review a few balance sheet and cash flow items.

Net working capital increased to $135 million at December 31, 2007 compared with $117.4 million at December 31, 2006. We define working capital as accounts receivables plus inventories less accounts payable.

The acquisitions completed in the interim timeframe contributed $14.8 million of working capital. Working capital turns improved to 5.1 turns at December 31 compared with 4.7 turns in the prior year quarter.

Our net debt, which we define as short-term debt plus long-term debt less cash is essentially flat at $129.1 million at December 31, 2007 as compared to $128.6 million at September 30, 2007. The company’s balance sheet leverage ratio of net debt to total capital was 36% at the end of the quarter.

For the first half of fiscal 2008 depreciation and amortization expense was $8.4 million, up from the prior year expense of $6.3 million. This increase was due to the amortization of intangible assets related to the recent acquisitions and higher depreciation.

Capital expenditures during the first half totaled $5.8 million. Based on the activity in the first half of the year, we estimate total capital expenditures during 2008 will range between $11 million and $13 million; an estimated full-year depreciation and amortization expense will be $17 million to $18 million.

Let me close by saying that we’re pleased with our performance in the second quarter given the macroeconomic factors that are affecting several segments of our business. We are executing well and our foodservice equipment business as we capitalize on new opportunities for growth across our business lines.

We also expect continued strong performance out of our engineered products group. We’re seeing many exciting opportunities that are created by strong demand across all of [inaudible] end markets.

We’re also more optimistic about the near term prospects for our engraving group. With the new platforms from our North America auto customers coming online, we expect to see good performance from this group in the near term.

We’re less optimistic about the near term prospects for our ADP and Hydraulics Group due to very challenging market conditions. With both of these businesses we are aggressively taking every opportunity to enhance market share and implement cost reductions.

With that we’ll now turn to your questions.

On your engineered business the Orion project, you’re very specific about it but is that a one-time only project or is that just a first stage and there may be multiple stages of it?

It’s the latter. That is the first stage or first step in the project.

This is for tooling and prototype hardware that we understand will be used in the initial design and qualification of that rocket. Assuming it’s successful there’ll be then additional hardware over the years that will be used for actual launch purposes.

In the [inaudible] group, you are very eloquent about how enthusiastic you are about the business, but can you be a little bit more specific about what types of things you’re making and for what types of customers beyond the broad industry segments that you serve?

The Spincraft business, their core competence is in the area of large fabricated metal alloy components used in a number of applications. For example, in the rocket program, they were used to make domes that are used in the fuel tanks for the rocket programs.

In the energy side, we’re doing business with stationary land-based gas turbine manufacturers where we manufacture components in what I call the hot section of the turbine. Again, parts that are fabricated well and then spun for high alloy kinds of metals.

In aviation, a good example is the lift skins which is the piece of the cell that surrounds the jet engine on an aircraft. That’s the inlet piece and we fabricate those components as well.

So, a pretty wide variety of what I call engineered products where metallurgy and our ability to fabricate products into unique configurations is a core competence we’ve developed.

A question on the air distribution products group. Do you think you can hold it at breakeven given the top line and cost pressures?

You know we don’t give projections. I think we’re going to be challenged in that regard.

The industry has not gone for price increases. Metal prices seem to be stabilized at the current level, but we’re concerned about our volume going forward.

We really haven’t seen that we’re at the bottom and the question is what really happens to the volume and do we get any relief on the metal costs?

So in the second quarter the metal pricing was not as high as it appears it will be in the second half. Is that a fair statement?

That’s a fair statement as it relates to the industry, that’s correct.

You did a nice job talking about the Foodservice group, but I wasn’t quite clear. You mentioned two significant pieces of business that I wasn’t sure whether you won them in the quarter or you executed and moved out the goods in the second quarter.

I was just trying to get a sense of have we actually seen that business flow through the P&L already, or only part of it? Can you address that?

Those were projects that were actually shipped and invoiced during the first half. They kind of overlapped, of course, but they both shipped between the first and the second quarters.

We thank everyone for attending the conference. We look forward to talking to you again next quarter.

Thank you.