IDEX Reports Second Quarter Results; Delivers Record Operating Margin and EPS; Raises Low End of Full Year EPS Guidance

LAKE FOREST, Ill.--()--IDEX Corporation (NYSE: IEX) today announced its financial results for the three month period ended June 30, 2019.

Second Quarter 2019 Highlights

  • Sales were up 1 percent overall and 3 percent organically
  • Reported operating margin was 24.2 percent with adjusted operating margin of 24.5 percent, up 90 bps
  • Reported EPS was $1.48 with adjusted EPS of $1.50, up 7 percent
  • Acquired Velcora Holding AB in July

Second Quarter 2019

Orders of $628.1 million were down 2 percent compared with the prior year period (flat organic and -2 percent foreign currency translation).

Sales of $642.1 million were up 1 percent compared with the prior year period (+3 percent organic and -2 percent foreign currency translation).

Gross margin of 45.5 percent was up 20 basis points compared with the prior year period primarily due to price, volume leverage and productivity initiatives, partially offset by higher engineering investments across all three segments.

Operating income of $155.3 million resulted in an operating margin of 24.2 percent. Excluding $2.1 million of restructuring expenses, adjusted operating income was $157.4 million with an adjusted operating margin of 24.5 percent, up 90 basis points compared with the adjusted prior year period primarily due to gross margin expansion, lower 2019 amortization and variable compensation costs and the stamp duty charge included in the prior year. Adjusted operating income drove adjusted EBITDA of $177.0 million which was 28 percent of sales and covered interest expense by 16 times.

Provision for income taxes of $31.4 million in the second quarter of 2019 resulted in an effective tax rate (ETR) of 21.7 percent, which was flat compared with the prior year ETR. The 21.7 percent second quarter ETR was 80 basis points lower than our previously guided rate mainly due to a higher excess tax benefit from stock option exercises.

Net income was $113.2 million which resulted in EPS of $1.48. Excluding restructuring expenses, adjusted EPS was $1.50, an increase of 10 cents, or 7 percent, from the adjusted prior year period EPS.

Cash from operations of $131.2 million led to free cash flow of $118.3 million, which was up 8 percent from the prior year period and 103 percent of adjusted net income. The increase in free cash flow was primarily due to increased earnings and favorable operating working capital, partially offset by higher capital expenditures in the second quarter of 2019.

The Company repurchased 19 thousand shares of common stock for $3.0 million in the second quarter of 2019, at an average price of $154.73.

“Our performance in the second quarter was a great example of how our teams can execute in a volatile environment. Lingering trade tensions during the second quarter caused growth to decelerate across the global economy as companies are employing a wait and see approach in the near term. We also continue to see specific market pressure within our agriculture, semiconductor and auto end markets. In spite of this pressure, we grew organic sales by 3 percent across all three segments. Adjusted operating margin remains a great story, increasing 90 basis points and reaching an all-time quarterly high. Adjusted EPS grew 7 percent and reached a record high of $1.50. Overall, I am pleased with our second quarter operating results in this choppy environment.

 

Our commitment to invest in the best organic growth opportunities continues to be paramount as the second quarter was our tenth consecutive quarter of organic sales growth. M&A remains a top priority for the Company as well, and last week we announced the acquisition of Velcora Holding, a great addition to our Sealing Solutions platform within our Health & Science segment. The M&A funnel is strong, and our balance sheet has significant capacity to support additional opportunities.

 

Despite the flat order growth in the second quarter and an uncertain macro environment, we expect to continue our streak of quarterly organic sales growth and margin expansion for the balance of the year. As a result, we are raising the low end of our full year earnings guidance by 8 cents. Full year 2019 adjusted EPS is now projected to be $5.78 to $5.85, with full year organic revenue growth expectations of 3 to 4 percent. Third quarter EPS is projected to be $1.45 to $1.47, with organic revenue growth of approximately 3 percent.”

 

 

Andrew K. Silvernail

 

Chairman and Chief Executive Officer

Second Quarter 2019 Segment Highlights

Fluid & Metering Technologies

  • Sales of $246.2 million reflected a 1 percent increase compared to the second quarter of 2018 (+3 percent organic and -2 percent foreign currency translation).
  • Operating income of $74.1 million resulted in an operating margin of 30.1 percent. Excluding $0.9 million of restructuring expenses, adjusted operating income was $75.0 million with an adjusted operating margin of 30.5 percent, a 100 basis point increase compared to the adjusted prior year period primarily due to higher volume, price and productivity initiatives, partially offset by higher engineering investments.
  • EBITDA of $79.5 million resulted in an EBITDA margin of 32.3 percent. Excluding $0.9 million of restructuring expenses, adjusted EBITDA of $80.4 million resulted in an adjusted EBITDA margin of 32.7 percent, a 110 basis point increase compared to the adjusted prior year period primarily due to increased operating income.

Health & Science Technologies

  • Sales of $232.3 million reflected a 2 percent increase compared to the second quarter of 2018 (+3 percent organic, +1 percent acquisition and -2 percent foreign currency translation).
  • Operating income of $56.8 million resulted in an operating margin of 24.4 percent. Excluding $0.3 million of restructuring expenses, adjusted operating income was $57.1 million with an adjusted operating margin of 24.6 percent, a 100 basis point increase compared to the adjusted prior year period primarily due to higher volume and lower amortization, partially offset by higher engineering investments.
  • EBITDA of $66.3 million resulted in an EBITDA margin of 28.6 percent. Excluding $0.3 million of restructuring expenses, adjusted EBITDA of $66.6 million resulted in an adjusted EBITDA margin of 28.7 percent, a 40 basis point increase compared to the adjusted prior year period primarily due to increased operating income.

Fire & Safety/Diversified Products

  • Sales of $164.0 million were flat compared to the second quarter of 2018 (+3 percent organic and -3 percent foreign currency translation).
  • Operating income of $43.6 million resulted in an operating margin of 26.6 percent. Excluding $0.8 million of restructuring expenses, adjusted operating income was $44.4 million with an adjusted operating margin of 27.1 percent, a 100 basis point decrease compared to the adjusted prior year period primarily due to product mix and higher engineering investments.
  • EBITDA of $47.5 million resulted in an EBITDA margin of 28.9 percent. Excluding $0.8 million of restructuring expenses, adjusted EBITDA of $48.3 million resulted in an adjusted EBITDA margin of 29.4 percent, a 90 basis point decrease compared to the adjusted prior year period primarily due to a decrease in operating income.

For the second quarter of 2019, Fluid & Metering Technologies contributed 38 percent of sales, 42 percent of operating income and 41 percent of EBITDA; Health & Science Technologies accounted for 36 percent of sales, 33 percent of operating income and 34 percent of EBITDA; and Fire & Safety/Diversified Products represented 26 percent of sales, 25 percent of operating income and 25 percent of EBITDA.

Corporate Costs

Corporate costs decreased to $19.2 million in the second quarter of 2019 compared to $21.6 million in the second quarter of 2018, primarily due to the prior year period including a $2.2 million stamp duty in Switzerland associated with the restructuring of intercompany loans.

Acquisition

In July 2019, the Company acquired Velcora Holding AB and its Roplan and Steridose businesses. Roplan is a global manufacturer of custom mechanical and shaft seals for a variety of end markets including food & beverage, marine, chemical, wastewater and water treatment. Steridose develops engineered hygienic mixers and valves for the global biopharmaceutical industry. Roplan and Steridose, with annual revenue of approximately $40 million, will operate within the Health & Science Technologies segment.

Non-U.S. GAAP Measures of Financial Performance

The Company supplements certain U.S. GAAP financial performance metrics with non-U.S. GAAP financial performance metrics in order to provide investors with better insight and increased transparency while also allowing for a more comprehensive understanding of the financial information used by management in its decision making. Reconciliations of non-U.S. GAAP financial performance metrics to their most comparable U.S. GAAP financial performance metrics are defined and presented below and should not be considered a substitute for, nor superior to, the financial data prepared in accordance with U.S. GAAP. There were no adjustments to U.S. GAAP financial performance metrics other than the items noted below.

  • Organic orders and sales are calculated excluding amounts from acquired or divested businesses during the first twelve months of ownership or divestiture and the impact of foreign currency translation.
  • Adjusted operating income is calculated as operating income plus restructuring expenses.
  • Adjusted operating margin is calculated as adjusted operating income divided by net sales.
  • Adjusted net income is calculated as net income plus restructuring expenses, net of the statutory tax expense or benefit.
  • EBITDA is calculated as net income plus interest expense plus provision for income taxes plus depreciation and amortization. We reconciled EBITDA to net income on a consolidated basis as we do not allocate consolidated interest expense or consolidated provision for income taxes to our segments.
  • Adjusted EBITDA is calculated as EBITDA plus restructuring expenses.
  • Free cash flow is calculated as cash flow from operating activities less capital expenditures

Table 1: Reconciliations of the Change in Net Sales to Organic Net Sales

 

Three Months Ended
June 30, 2019

 

Six Months Ended
June 30, 2019

 

FMT

 

HST

 

FSDP

 

IDEX

 

FMT

 

HST

 

FSDP

 

IDEX

Change in net sales

1

%

 

2

%

 

%

 

1

%

 

3

%

 

2

%

 

(1

)%

 

1

%

- Net impact from acquisitions

%

 

1

%

 

%

 

%

 

%

 

1

%

 

%

 

%

- Impact from FX

(2

)%

 

(2

)%

 

(3

)%

 

(2

)%

 

(2

)%

 

(2

)%

 

(3

)%

 

(2

)%

Change in organic net sales

3

%

 

3

%

 

3

%

 

3

%

 

5

%

 

3

%

 

2

%

 

3

%

Table 2: Reconciliations of Reported-to-Adjusted Operating Income and Margin (dollars in thousands)

 

Three Months Ended June 30,

 

2019

 

2018

 

FMT

 

HST

 

FSDP

 

Corporate

 

IDEX

 

FMT

 

HST

 

FSDP

 

Corporate

 

IDEX

Reported operating income (loss)

$

74,146

 

 

$

56,763

 

 

$

43,614

 

 

$

(19,240

)

 

$155,283

 

$

71,228

 

 

$

52,569

 

 

$

45,882

 

 

$

(21,848

)

 

$147,831

+ Restructuring expenses

930

 

 

330

 

 

819

 

 

47

 

 

2,126

 

 

343

 

 

1,123

 

 

267

 

 

255

 

 

1,988

 

Adjusted operating income (loss)

$

75,076

 

 

$

57,093

 

 

$

44,433

 

 

$

(19,193

)

 

$

157,409

 

 

$

71,571

 

 

$

53,692

 

 

$

46,149

 

 

$

(21,593

)

 

$

149,819

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales (eliminations)

$

246,189

 

 

$

232,253

 

 

$

164,043

 

 

$

(386

)

 

$

642,099

 

 

$

242,800

 

 

$

227,403

 

 

$

164,300

 

 

$

(143

)

 

$

634,360

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported operating margin

30.1

%

 

24.4

%

 

26.6

%

 

n/m

 

24.2

%

 

29.3

%

 

23.1

%

 

27.9

%

 

n/m

 

23.3

%

Adjusted operating margin

30.5

%

 

24.6

%

 

27.1

%

 

n/m

 

24.5

%

 

29.5

%

 

23.6

%

 

28.1

%

 

n/m

 

23.6

%

 

Six Months Ended June 30,

 

2019

 

2018

 

FMT

 

HST

 

FSDP

 

Corporate

 

IDEX

 

FMT

 

HST

 

FSDP

 

Corporate

 

IDEX

Reported operating income (loss)

$

146,012

 

 

$

110,917

 

 

$

83,942

 

 

$

(37,806

)

 

$

303,065

 

 

$

137,394

 

 

$

104,375

 

 

$

85,436

 

 

$

(42,691

)

 

$

284,514

 

+ Restructuring expenses

930

 

 

330

 

 

819

 

 

47

 

 

2,126

 

 

486

 

 

2,182

 

 

367

 

 

595

 

 

3,630

 

Adjusted operating income (loss)

$

146,942

 

 

$

111,247

 

 

$

84,761

 

 

$

(37,759

)

 

$

305,191

 

 

$

137,880

 

 

$

106,557

 

 

$

85,803

 

 

$

(42,096

)

 

$

288,144

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales (eliminations)

$

488,711

 

 

$

457,543

 

 

$

320,202

 

 

$

(2,126

)

 

$

1,264,330

 

 

$

475,133

 

 

$

448,478

 

 

$

323,473

 

 

$

(400

)

 

$

1,246,684

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported operating margin

29.9

%

 

24.2

%

 

26.2

%

 

n/m

 

24.0

%

 

28.9

%

 

23.3

%

 

26.4

%

 

n/m

 

22.8

%

Adjusted operating margin

30.1

%

 

24.3

%

 

26.5

%

 

n/m

 

24.1

%

 

29.0

%

 

23.8

%

 

26.5

%

 

n/m

 

23.1

%

Table 3: Reconciliations of Reported-to-Adjusted Net Income and EPS (in thousands, except EPS)

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

2019

 

2018

 

2019

 

2018

Reported net income

$

113,209

 

 

$

107,126

 

 

$

223,477

 

 

$

206,084

 

+ Restructuring expenses

2,126

 

 

1,988

 

 

2,126

 

 

3,630

 

+ Tax impact on restructuring expenses

(560

)

 

(494

)

 

(560

)

 

(873

)

Adjusted net income

$

114,775

 

 

$

108,620

 

 

$

225,043

 

 

$

208,841

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

2019

 

2018

 

2019

 

2018

Reported diluted EPS

$

1.48

 

 

$

1.38

 

 

$

2.92

 

 

$

2.65

 

+ Restructuring expenses

0.03

 

 

0.03

 

 

0.03

 

 

0.05

 

+ Tax impact on restructuring expenses

(0.01

)

 

(0.01

)

 

(0.01

)

 

(0.01

)

Adjusted diluted EPS

$

1.50

 

 

$

1.40

 

 

$

2.94

 

 

$

2.69

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

76,387

 

 

77,704

 

 

76,334

 

 

77,722

 

Table 4: Reconciliations of EBITDA to Net Income (dollars in thousands)

 

Three Months Ended June 30,

 

2019

 

2018

 

FMT

 

HST

 

FSDP

 

Corporate

 

IDEX

 

FMT

 

HST

 

FSDP

 

Corporate

 

IDEX

Reported operating income (loss)

$

74,146

 

 

$

56,763

 

 

$

43,614

 

 

$

(19,240

)

 

$

155,283

 

 

$

71,228

 

 

$

52,569

 

 

$

45,882

 

 

$

(21,848

)

 

$

147,831

 

- Other (income) expense - net

239

 

 

80

 

 

(140

)

 

(557

)

 

(378

)

 

511

 

 

(463

)

 

(45

)

 

(53

)

 

(50

)

+ Depreciation and amortization

5,640

 

 

9,635

 

 

3,717

 

 

172

 

 

19,164

 

 

5,707

 

 

10,090

 

 

3,597

 

 

176

 

 

19,570

 

EBITDA

79,547

 

 

66,318

 

 

47,471

 

 

(18,511

)

 

174,825

 

 

76,424

 

 

63,122

 

 

49,524

 

 

(21,619

)

 

167,451

 

- Interest expense

 

 

 

 

 

 

 

 

11,011

 

 

 

 

 

 

 

 

 

 

11,140

 

- Provision for income taxes

 

 

 

 

 

 

 

 

31,441

 

 

 

 

 

 

 

 

 

 

29,615

 

- Depreciation and amortization

 

 

 

 

 

 

 

 

19,164

 

 

 

 

 

 

 

 

 

 

19,570

 

Reported net income

 

 

 

 

 

 

 

 

$

113,209

 

 

 

 

 

 

 

 

 

 

$

107,126

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales (eliminations)

$

246,189

 

 

$

232,253

 

 

$

164,043

 

 

$

(386

)

 

$

642,099

 

 

$

242,800

 

 

$

227,403

 

 

$

164,300

 

 

$

(143

)

 

$

634,360

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported operating margin

30.1

%

 

24.4

%

 

26.6

%

 

n/m

 

24.2

%

 

29.3

%

 

23.1

%

 

27.9

%

 

n/m

 

23.3

%

EBITDA margin

32.3

%

 

28.6

%

 

28.9

%

 

n/m

 

27.2

%

 

31.5

%

 

27.8

%

 

30.1

%

 

n/m

 

26.4

%

 

Six Months Ended June 30,

 

2019

 

2018

 

FMT

 

HST

 

FSDP

 

Corporate

 

IDEX

 

FMT

 

HST

 

FSDP

 

Corporate

 

IDEX

Reported operating income (loss)

$

146,012

 

 

$

110,917

 

 

$

83,942

 

 

$

(37,806

)

 

$

303,065

 

 

$

137,394

 

 

$

104,375

 

 

$

85,436

 

 

$

(42,691

)

 

$

284,514

 

- Other (income) expense - net

317

 

 

364

 

 

365

 

 

(1,564

)

 

(518

)

 

645

 

 

(1,060

)

 

(3,666

)

 

(418

)

 

(4,499

)

+ Depreciation and amortization

11,146

 

 

19,142

 

 

7,179

 

 

356

 

 

37,823

 

 

11,401

 

 

21,479

 

 

7,371

 

 

373

 

 

40,624

 

EBITDA

156,841

 

 

129,695

 

 

90,756

 

 

(35,886

)

 

341,406

 

 

148,150

 

 

126,914

 

 

96,473

 

 

(41,900

)

 

329,637

 

- Interest expense

 

 

 

 

 

 

 

 

21,932

 

 

 

 

 

 

 

 

 

 

22,140

 

- Provision for income taxes

 

 

 

 

 

 

 

 

58,174

 

 

 

 

 

 

 

 

 

 

60,789

 

- Depreciation and amortization

 

 

 

 

 

 

 

 

37,823

 

 

 

 

 

 

 

 

 

 

40,624

 

Reported net income

 

 

 

 

 

 

 

 

$

223,477

 

 

 

 

 

 

 

 

 

 

$

206,084

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales (eliminations)

$

488,711

 

 

$

457,543

 

 

$

320,202

 

 

$

(2,126

)

 

$

1,264,330

 

 

$

475,133

 

 

$

448,478

 

 

$

323,473

 

 

$

(400

)

 

$

1,246,684

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported operating margin

29.9

%

 

24.2

%

 

26.2

%

 

n/m

 

24.0

%

 

28.9

%

 

23.3

%

 

26.4

%

 

n/m

 

22.8

%

EBITDA margin

32.1

%

 

28.3

%

 

28.3

%

 

n/m

 

27.0

%

 

31.2

%

 

28.3

%

 

29.8

%

 

n/m

 

26.4

%

Table 5: Reconciliations of EBITDA to Adjusted EBITDA (dollars in thousands)

 

Three Months Ended June 30,

 

2019

 

2018

 

FMT

 

HST

 

FSDP

 

Corporate

 

IDEX

 

FMT

 

HST

 

FSDP

 

Corporate

 

IDEX

EBITDA

$

79,547

 

 

$

66,318

 

 

$

47,471

 

 

$

(18,511

)

 

$

174,825

 

 

$

76,424

 

 

$

63,122

 

 

$

49,524

 

 

$

(21,619

)

 

$

167,451

 

+ Restructuring expenses

930

 

 

330

 

 

819

 

 

47

 

 

2,126

 

 

343

 

 

1,123

 

 

267

 

 

255

 

 

1,988

 

Adjusted EBITDA

$

80,477

 

 

$

66,648

 

 

$

48,290

 

 

$

(18,464

)

 

$

176,951

 

 

$

76,767

 

 

$

64,245

 

 

$

49,791

 

 

$

(21,364

)

 

$

169,439

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA margin

32.7

%

 

28.7

%

 

29.4

%

 

n/m

 

27.6

%

 

31.6

%

 

28.3

%

 

30.3

%

 

n/m

 

26.7

%

 

Six Months Ended June 30,

 

2019

 

2018

 

FMT

 

HST

 

FSDP

 

Corporate

 

IDEX

 

FMT

 

HST

 

FSDP

 

Corporate

 

IDEX

EBITDA

$

156,841

 

 

$

129,695

 

 

$

90,756

 

 

$

(35,886

)

 

$

341,406

 

 

$

148,150

 

 

$

126,914

 

 

$

96,473

 

 

$

(41,900

)

 

$

329,637

 

+ Restructuring expenses

930

 

 

330

 

 

819

 

 

47

 

 

2,126

 

 

486

 

 

2,182

 

 

367

 

 

595

 

 

3,630

 

Adjusted EBITDA

$

157,771

 

 

$

130,025

 

 

$

91,575

 

 

$

(35,839

)

 

$

343,532

 

 

$

148,636

 

 

$

129,096

 

 

$

96,840

 

 

$

(41,305

)

 

$

333,267

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA margin

32.3

%

 

28.4

%

 

28.6

%

 

n/m

 

27.2

%

 

31.3

%

 

28.8

%

 

29.9

%

 

n/m

 

26.7

%

Table 6: Reconciliations of Cash Flows from Operating Activities to Free Cash Flow (in thousands)

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

March 31,

 

June 30,

 

2019

 

2018

 

2019

 

2019

 

2018

Cash flows from operating activities

$

131,175

 

 

$

120,697

 

 

$

88,663

 

 

$

219,838

 

 

$

192,426

 

- Capital expenditures

12,867

 

 

10,959

 

 

12,875

 

 

25,742

 

 

20,968

 

Free cash flow

$

118,308

 

 

$

109,738

 

 

$

75,788

 

 

$

194,096

 

 

$

171,458

 

Conference Call to be Broadcast over the Internet

IDEX will broadcast its second quarter earnings conference call over the Internet on Friday, July 26, 2019 at 9:30 a.m. CT. Chairman and Chief Executive Officer Andy Silvernail and Senior Vice President and Chief Financial Officer William Grogan will discuss the Company’s recent financial performance and respond to questions from the financial analyst community. IDEX invites interested investors to listen to the call and view the accompanying slide presentation, which will be carried live on its website at www.idexcorp.com. Those who wish to participate should log on several minutes before the discussion begins. After clicking on the presentation icon, investors should follow the instructions to ensure their systems are set up to hear the event and view the presentation slides, or download the correct applications at no charge. Investors will also be able to hear a replay of the call by dialing 877.660.6853 (or 201.612.7415 for international participants) using the ID #13684163.

Forward-Looking Statements

This news release contains “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These statements may relate to, among other things, capital expenditures, acquisitions, cost reductions, cash flow, revenues, earnings, market conditions, global economies and operating improvements, and are indicated by words or phrases such as “anticipates,” “estimates,” “plans,” “expects,” “projects,” “forecasts,” “should,” “could,” “will,” “management believes,” “the Company believes,” “the Company intends,” and similar words or phrases. These statements are subject to inherent uncertainties and risks that could cause actual results to differ materially from those anticipated at the date of this news release. The risks and uncertainties include, but are not limited to, the following: economic and political consequences resulting from terrorist attacks and wars; levels of industrial activity and economic conditions in the U.S. and other countries around the world; pricing pressures and other competitive factors and levels of capital spending in certain industries, all of which could have a material impact on order rates and the Company's results, particularly in light of the low levels of order backlogs it typically maintains; the Company's ability to make acquisitions and to integrate and operate acquired businesses on a profitable basis; the relationship of the U.S. dollar to other currencies and its impact on pricing and cost competitiveness; political and economic conditions in foreign countries in which the Company operates; developments with respect to trade policy and tariffs; interest rates; capacity utilization and the effect this has on costs; labor markets; market conditions and material costs; and developments with respect to contingencies, such as litigation and environmental matters. Additional factors that could cause actual results to differ materially from those reflected in the forward-looking statements include, but are not limited to, the risks discussed in the “Risk Factors” section included in the Company’s most recent annual report on Form 10-K filed with the SEC and the other risks discussed in the Company’s filings with the SEC. The forward-looking statements included here are only made as of the date of this news release, and management undertakes no obligation to publicly update them to reflect subsequent events or circumstances, except as may be required by law. Investors are cautioned not to rely unduly on forward-looking statements when evaluating the information presented here.

About IDEX

IDEX (NYSE: IEX) is a company that has undoubtedly touched your life in some way. In fact, IDEX businesses make thousands of products that are mission-critical components in everyday activities. Chances are the car you’re driving has a BAND-IT® clamp holding your side airbag safely in place. If you were ever in a car accident, a Hurst Jaws of Life® rescue tool may have saved your life. If you or a family member is battling cancer, your doctor may have tested your DNA in a quest to find the best targeted medicine for you. It’s likely your DNA test was run on equipment that contains components made by our growing IDEX Health & Science team. Founded in 1988 with three small, entrepreneurial manufacturing companies, we’re proud to say that we now call 40 diverse businesses around the world part of the IDEX family. With 7,000 employees and manufacturing operations in more than 20 countries, IDEX is a high-performing, global $2+ billion company committed to making trusted solutions that improve lives. IDEX shares are traded on the New York Stock Exchange under the symbol “IEX”.

For further information on IDEX Corporation and its business units, visit the company’s website at www.idexcorp.com.

(Financial reports follow)

IDEX CORPORATION

Condensed Consolidated Statements of Operations

(in thousands except per share amounts)

(unaudited)

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

2019

 

2018

 

2019

 

2018

Net sales

$

642,099

 

 

$

634,360

 

 

$

1,264,330

 

 

$

1,246,684

 

Cost of sales

349,762

 

 

346,993

 

 

688,159

 

 

682,665

 

Gross profit

292,337

 

 

287,367

 

 

576,171

 

 

564,019

 

Selling, general and administrative expenses

134,928

 

 

137,548

 

 

270,980

 

 

275,875

 

Restructuring expenses

2,126

 

 

1,988

 

 

2,126

 

 

3,630

 

Operating income

155,283

 

 

147,831

 

 

303,065

 

 

284,514

 

Other (income) expense - net

(378

)

 

(50

)

 

(518

)

 

(4,499

)

Interest expense

11,011

 

 

11,140

 

 

21,932

 

 

22,140

 

Income before income taxes

144,650

 

 

136,741

 

 

281,651

 

 

266,873

 

Provision for income taxes

31,441

 

 

29,615

 

 

58,174

 

 

60,789

 

Net income

$

113,209

 

 

$

107,126

 

 

$

223,477

 

 

$

206,084

 

 

 

 

 

 

 

 

 

Earnings per Common Share:

 

 

 

 

 

 

 

Basic earnings per common share

$

1.50

 

 

$

1.40

 

 

$

2.96

 

 

$

2.69

 

Diluted earnings per common share

$

1.48

 

 

$

1.38

 

 

$

2.92

 

 

$

2.65

 

 

 

 

 

 

 

 

 

Share Data:

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

75,460

 

 

76,539

 

 

75,450

 

 

76,479

 

Diluted weighted average common shares outstanding

76,387

 

 

77,704

 

 

76,334

 

 

77,722

 

IDEX CORPORATION

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

 

June 30, 2019

 

December 31, 2018

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

543,189

 

 

$

466,407

 

Receivables - net

326,358

 

 

312,192

 

Inventories

301,006

 

 

279,995

 

Other current assets

46,329

 

 

33,938

 

Total current assets

1,216,882

 

 

1,092,532

 

Property, plant and equipment - net

275,025

 

 

281,220

 

Goodwill and intangible assets

2,063,073

 

 

2,081,282

 

Other noncurrent assets

85,235

 

 

18,823

 

Total assets

$

3,640,215

 

 

$

3,473,857

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

Current liabilities

 

 

 

Trade accounts payable

$

160,579

 

 

$

143,196

 

Accrued expenses

162,838

 

 

187,536

 

Short-term borrowings

452

 

 

483

 

Dividends payable

37,922

 

 

33,446

 

Total current liabilities

361,791

 

 

364,661

 

Long-term borrowings

848,555

 

 

848,335

 

Other noncurrent liabilities

317,828

 

 

266,221

 

Total liabilities

1,528,174

 

 

1,479,217

 

Shareholders' equity

2,112,041

 

 

1,994,640

 

Total liabilities and shareholders' equity

$

3,640,215

 

 

$

3,473,857

 

IDEX CORPORATION

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

Six Months Ended June 30,

 

2019

 

2018

Cash flows from operating activities

 

 

 

Net income

$

223,477

 

 

$

206,084

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

19,870

 

 

19,957

 

Amortization of intangible assets

17,953

 

 

20,667

 

Amortization of debt issuance expenses

669

 

 

664

 

Share-based compensation expense

14,413

 

 

13,252

 

Deferred income taxes

10,685

 

 

(3,021

)

Non-cash interest expense associated with forward starting swaps

3,171

 

 

3,259

 

Changes in (net of the effect from acquisitions):

 

 

 

Receivables

(14,177

)

 

(40,044

)

Inventories

(21,007

)

 

(28,011

)

Other current assets

(12,382

)

 

17,798

 

Trade accounts payable

17,276

 

 

5,432

 

Accrued expenses

(39,602

)

 

(21,131

)

Other - net

(508

)

 

(2,480

)

Net cash flows provided by operating activities

219,838

 

 

192,426

 

Cash flows from investing activities

 

 

 

Purchases of property, plant and equipment

(25,742

)

 

(20,968

)

Purchase of intellectual property

 

 

(4,000

)

Proceeds from disposal of fixed assets

780

 

 

 

Other - net

501

 

 

(861

)

Net cash flows used in investing activities

(24,461

)

 

(25,829

)

Cash flows from financing activities

 

 

 

Dividends paid

(71,283

)

 

(61,916

)

Proceeds from stock option exercises

20,761

 

 

13,616

 

Purchases of common stock

(54,668

)

 

(19,499

)

Shares surrendered for tax withholding

(11,509

)

 

(10,750

)

Settlement of foreign exchange contracts

 

 

6,593

 

Other - net

(1,929

)

 

 

Net cash flows used in financing activities

(118,628

)

 

(71,956

)

Effect of exchange rate changes on cash and cash equivalents

33

 

 

(11,840

)

Net increase in cash

76,782

 

 

82,801

 

Cash and cash equivalents at beginning of year

466,407

 

 

375,950

 

Cash and cash equivalents at end of period

$

543,189

 

 

$

458,751

 

IDEX CORPORATION

Company and Segment Financial Information - Reported

(dollars in thousands)

(unaudited)

 

 

Three Months Ended
June 30, (a)

 

Six Months Ended
June 30, (a)

 

2019

 

2018

 

2019

 

2018

Fluid & Metering Technologies

 

 

 

 

 

 

 

Net sales

$

246,189

 

 

$

242,800

 

 

$

488,711

 

 

$

475,133

 

Operating income (b)

74,146

 

 

71,228

 

 

146,012

 

 

137,394

 

Operating margin

30.1

%

 

29.3

%

 

29.9

%

 

28.9

%

EBITDA

$

79,547

 

 

$

76,424

 

 

$

156,841

 

 

$

148,150

 

EBITDA margin

32.3

%

 

31.5

%

 

32.1

%

 

31.2

%

Depreciation and amortization

$

5,640

 

 

$

5,707

 

 

$

11,146

 

 

$

11,401

 

Capital expenditures

3,350

 

 

3,981

 

 

6,580

 

 

8,655

 

 

 

 

 

 

 

 

 

Health & Science Technologies

 

 

 

 

 

 

 

Net sales

$

232,253

 

 

$

227,403

 

 

$

457,543

 

 

$

448,478

 

Operating income (b)

56,763

 

 

52,569

 

 

110,917

 

 

104,375

 

Operating margin

24.4

%

 

23.1

%

 

24.2

%

 

23.3

%

EBITDA

$

66,318

 

 

$

63,122

 

 

$

129,695

 

 

$

126,914

 

EBITDA margin

28.6

%

 

27.8

%

 

28.3

%

 

28.3

%

Depreciation and amortization

$

9,635

 

 

$

10,090

 

 

$

19,142

 

 

$

21,479

 

Capital expenditures

5,913

 

 

5,351

 

 

11,217

 

 

8,682

 

 

 

 

 

 

 

 

 

Fire & Safety/Diversified Products

 

 

 

 

 

 

 

Net sales

$

164,043

 

 

$

164,300

 

 

$

320,202

 

 

$

323,473

 

Operating income (b)

43,614

 

 

45,882

 

 

83,942

 

 

85,436

 

Operating margin

26.6

%

 

27.9

%

 

26.2

%

 

26.4

%

EBITDA

$

47,471

 

 

$

49,524

 

 

$

90,756

 

 

$

96,473

 

EBITDA margin

28.9

%

 

30.1

%

 

28.3

%

 

29.8

%

Depreciation and amortization

$

3,717

 

 

$

3,597

 

 

$

7,179

 

 

$

7,371

 

Capital expenditures

3,534

 

 

1,627

 

 

6,487

 

 

3,445

 

 

 

 

 

 

 

 

 

Corporate Office and Eliminations

 

 

 

 

 

 

 

Intersegment sales eliminations

$

(386

)

 

$

(143

)

 

$

(2,126

)

 

$

(400

)

Operating income (b)

(19,240

)

 

(21,848

)

 

(37,806

)

 

(42,691

)

EBITDA

(18,511

)

 

(21,619

)

 

(35,886

)

 

(41,900

)

Depreciation and amortization

172

 

 

176

 

 

356

 

 

373

 

Capital expenditures

70

 

 

 

 

1,458

 

 

186

 

 

 

 

 

 

 

 

 

Company

 

 

 

 

 

 

 

Net sales

$

642,099

 

 

$

634,360

 

 

$

1,264,330

 

 

$

1,246,684

 

Operating income

155,283

 

 

147,831

 

 

303,065

 

 

284,514

 

Operating margin

24.2

%

 

23.3

%

 

24.0

%

 

22.8

%

EBITDA

$

174,825

 

 

$

167,451

 

 

$

341,406

 

 

$

329,637

 

EBITDA margin

27.2

%

 

26.4

%

 

27.0

%

 

26.4

%

Depreciation and amortization (c)

$

19,164

 

 

$

19,570

 

 

$

37,823

 

 

$

40,624

 

Capital expenditures

12,867

 

 

10,959

 

 

25,742

 

 

20,968

 

IDEX CORPORATION

Company and Segment Financial Information - Adjusted

(dollars in thousands)

(unaudited)

 

 

 

Three Months Ended
June 30, (a)

 

Six Months Ended
June 30, (a)

 

 

2019

 

2018

 

2019

 

2018

 

Fluid & Metering Technologies

 

 

 

 

 

 

 

 

Net sales

$

246,189

 

 

$

242,800

 

 

$

488,711

 

 

$

475,133

 

 

Adjusted operating income (b)

75,076

 

 

71,571

 

 

146,942

 

 

137,880

 

 

Adjusted operating margin

30.5

%

 

29.5

%

 

30.1

%

 

29.0

%

 

Adjusted EBITDA

$

80,477

 

 

$

76,767

 

 

$

157,771

 

 

$

148,636

 

 

Adjusted EBITDA margin

32.7

%

 

31.6

%

 

32.3

%

 

31.3

%

 

Depreciation and amortization

$

5,640

 

 

$

5,707

 

 

$

11,146

 

 

$

11,401

 

 

Capital expenditures

3,350

 

 

3,981

 

 

6,580

 

 

8,655

 

 

 

 

 

 

 

 

 

 

 

Health & Science Technologies

 

 

 

 

 

 

 

 

Net sales

$

232,253

 

 

$

227,403

 

 

$

457,543

 

 

$

448,478

 

 

Adjusted operating income (b)

57,093

 

 

53,692

 

 

111,247

 

 

106,557

 

 

Adjusted operating margin

24.6

%

 

23.6

%

 

24.3

%

 

23.8

%

 

Adjusted EBITDA

$

66,648

 

 

$

64,245

 

 

$

130,025

 

 

$

129,096

 

 

Adjusted EBITDA margin

28.7

%

 

28.3

%

 

28.4

%

 

28.8

%

 

Depreciation and amortization

$

9,635

 

 

$

10,090

 

 

$

19,142

 

 

$

21,479

 

 

Capital expenditures

5,913

 

 

5,351

 

 

11,217

 

 

8,682

 

 

 

 

 

 

 

 

 

 

 

Fire & Safety/Diversified Products

 

 

 

 

 

 

 

 

Net sales

$

164,043

 

 

$

164,300

 

 

$

320,202

 

 

$

323,473

 

 

Adjusted operating income (b)

44,433

 

 

46,149

 

 

84,761

 

 

85,803

 

 

Adjusted operating margin

27.1

%

 

28.1

%

 

26.5

%

 

26.5

%

 

Adjusted EBITDA

$

48,290

 

 

$

49,791

 

 

$

91,575

 

 

$

96,840

 

 

Adjusted EBITDA margin

29.4

%

 

30.3

%

 

28.6

%

 

29.9

%

 

Depreciation and amortization

$

3,717

 

 

$

3,597

 

 

$

7,179

 

 

$

7,371

 

 

Capital expenditures

3,534

 

 

1,627

 

 

6,487

 

 

3,445

 

 

 

 

 

 

 

 

 

 

 

Corporate Office and Eliminations

 

 

 

 

 

 

 

 

Intersegment sales eliminations

$

(386

)

 

$

(143

)

 

$

(2,126

)

 

$

(400

)

 

Adjusted operating income (b)

(19,193

)

 

(21,593

)

 

(37,759

)

 

(42,096

)

 

Adjusted EBITDA

(18,464

)

 

(21,364

)

 

(35,839

)

 

(41,305

)

 

Depreciation and amortization

172

 

 

176

 

 

356

 

 

373

 

 

Capital expenditures

70

 

 

 

 

1,458

 

 

186

 

 

 

 

 

 

 

 

 

 

 

Company

 

 

 

 

 

 

 

 

Net sales

$

642,099

 

 

$

634,360

 

 

$

1,264,330

 

 

$

1,246,684

 

 

Adjusted operating income

157,409

 

 

149,819

 

 

305,191

 

 

288,144

 

 

Adjusted operating margin

24.5

%

 

23.6

%

 

24.1

%

 

23.1

%

 

Adjusted EBITDA

$

176,951

 

 

$

169,439

 

 

$

343,532

 

 

$

333,267

 

 

Adjusted EBITDA margin

27.6

%

 

26.7

%

 

27.2

%

 

26.7

%

 

Depreciation and amortization (c)

$

19,164

 

 

$

19,570

 

 

$

37,823

 

 

$

40,624

 

 

Capital expenditures

12,867

 

 

10,959

 

 

25,742

 

 

20,968

 

(a)

Three and six month data includes the results of Finger Lakes Instrumentation (July 2018) in the Health & Science Technologies segment from the date of acquisition.

(b)

Segment operating income excludes unallocated corporate operating expenses which are included in Corporate Office and Eliminations.

(c)

Depreciation and amortization excludes amortization of debt issuance costs.

 

Contacts

Investor Contact:
William K. Grogan
Senior Vice President and Chief Financial Officer
(847) 498-7070

Contacts

Investor Contact:
William K. Grogan
Senior Vice President and Chief Financial Officer
(847) 498-7070