IDEX Reports Fourth Quarter and Record Full Year 2019 Results

LAKE FOREST, Ill.--()--IDEX Corporation (NYSE: IEX) today announced its financial results for the three- and twelve- month periods ended December 31, 2019.

Full Year 2019 Highlights

  • Reported operating margin was 23.2 percent with adjusted operating margin of 24.2 percent, up 80 bps
  • Reported EPS was $5.56 with adjusted EPS of $5.80, up 7 percent
  • Free cash flow was a record of $477.2 million, up 13 percent
  • Acquired the stock of Velcora Holding AB and its operating subsidiaries, Roplan and Steridose in July 2019

Full Year 2019

Orders of $2.5 billion were flat compared with the prior year (flat organic, +1 percent acquisition and -1 percent foreign currency translation).

Sales of $2.5 billion were flat compared with the prior year (+1 percent organic, +1 percent acquisition and -2 percent foreign currency translation).

Gross margin of 45.1 percent was up 10 basis points compared with the prior year primarily due to price capture and productivity initiatives, partially offset by inflation and higher engineering costs. Excluding a $3.3 million pre-tax fair value inventory step-up charge related to the Velcora acquisition, adjusted gross margin of 45.2 percent was up 20 basis points.

Operating income of $579.0 million resulted in an operating margin of 23.2 percent. Excluding the $3.3 million fair value inventory step-up charge and $21.0 million of restructuring expenses, adjusted operating income was $603.3 million with an adjusted operating margin of 24.2 percent, up 80 basis points from the prior year mainly due to price, productivity initiatives and lower variable compensation expenses. Adjusted operating income drove adjusted EBITDA of $678.5 million which was 27 percent of sales and covered interest expense by more than 15 times.

Provision for income taxes of $107.4 million resulted in an effective tax rate (ETR) of 20.2 percent, which was lower than the prior year ETR of 22.4 percent primarily due to excess tax benefits and other discrete tax benefits in 2019 and certain one-time charges related to Tax Reform incurred in 2018.

Net income was $425.5 million which resulted in EPS of $5.56. Excluding the fair value inventory step-up charge and restructuring expenses, adjusted EPS of $5.80 increased 39 cents, or 7 percent, from the prior year adjusted EPS.

Cash from operations of $528.1 million was up 10 percent from the prior year and led to free cash flow of $477.2 million, which was up 13 percent from the prior year and 107 percent of adjusted net income. The increase in free cash flow was primarily due to working capital improvements and lower capital expenditures.

The Company repurchased 389 thousand shares of common stock for $54.7 million in 2019.

Fourth Quarter 2019

Orders of $616.6 million were up 1 percent compared with the prior year period (flat organic, +2 percent acquisition and -1 percent foreign currency translation).

Sales of $606.0 million were down 1 percent compared with the prior year period (-2 percent organic, +2 percent acquisition and -1 percent foreign currency translation).

Gross margin of 44.0 percent was down 60 basis points compared with the prior year period primarily due to lower volume leverage, partially offset by price and productivity initiatives.

Operating income of $134.2 million resulted in an operating margin of 22.1 percent. Excluding $7.0 million of restructuring expenses, adjusted operating income was $141.2 million with an adjusted operating margin of 23.3 percent, which was flat compared to the prior year period due to lower variable compensation costs. Adjusted operating income drove adjusted EBITDA of $159.6 million which was 26 percent of sales and covered interest expense by over 14 times.

Provision for income taxes of $25.2 million resulted in an ETR of 20.6 percent, which was lower than the prior year period ETR of 23.8 percent primarily due to excess tax benefits and other discrete tax benefits in 2019 and certain one-time charges related to Tax Reform incurred in the fourth quarter of 2018.

Net income was $96.9 million which resulted in EPS of $1.26. Excluding restructuring expenses, adjusted EPS of $1.33 increased 2 cents, or 2 percent, from the prior year period adjusted EPS.

Cash from operations of $151.2 million was down 2 percent from the prior year period and led to free cash flow of $137.0 million, which was flat compared to the prior year period and 134 percent of adjusted net income.

“IDEX’s full year organic sales increased for the third year in a row and led to record operating results including operating income, EPS, EBITDA and free cash flow. The team captured price and delivered productivity which led to margin expansion. In 2019 adjusted gross margin and adjusted operating margin improved by 20 and 80 basis points, respectively. The team also drove significant improvements in working capital, achieving record free cash flow for the year of $477 million.

 

However, in the fourth quarter of the year global demand for industrial products continued to weaken, with U.S. manufacturing activity in December posting the lowest results in a decade according to the ISM index. This softness in our short cycle industrial facing businesses led to a 2 percent organic sales decline and our adjusted EPS to the low end of our guidance of $1.33. Recognizing these challenging market conditions, we executed a restructuring plan in the fourth quarter which will provide $15 million of savings in 2020. These restructuring actions will help mitigate the impact from the market softness on our financials while allowing us to retain our key investments for future growth.

 

Our strong balance sheet and our ability to generate solid free cash flow even in a slowing demand environment gives us the ability to continue to deploy capital towards our organic growth initiatives and our other capital deployment objectives. M&A remains a key priority and earlier today we announced a definitive agreement to acquire Flow Management Devices, LLC (Flow MD), a leading provider of small volume provers used to ensure flow accuracy in critical applications in the oil and gas industry. We are excited for them to be joining the IDEX family of businesses by the end of the first quarter.

 

Looking forward to 2020, our expectation is that the industrial markets will remain challenged through the first half of the year and as a result we are projecting flat to 2 percent organic sales decline for the year, with a 4 to 5 percent organic sales decline in the first quarter. Full year 2020 EPS is projected to be $5.55 to $5.85, with first quarter EPS of $1.30 to $1.34.”

 

 

Andrew K. Silvernail

 

Chairman and Chief Executive Officer

Fourth Quarter 2019 Segment Highlights

Fluid & Metering Technologies

  • Sales of $227.5 million reflected a 4 percent decrease compared to the fourth quarter of 2018 (-3 percent organic and -1 percent foreign currency translation).
  • Operating income of $61.8 million resulted in an operating margin of 27.2 percent. Excluding $1.9 million of restructuring expenses, adjusted operating income was $63.7 million with an adjusted operating margin of 28.0 percent, a 110 basis point decrease compared to the prior year period primarily due to lower volume.
  • EBITDA of $67.4 million resulted in an EBITDA margin of 29.6 percent. Excluding $1.9 million of restructuring expenses, adjusted EBITDA of $69.3 million resulted in an adjusted EBITDA margin of 30.5 percent, a 80 basis point decrease compared to the prior year period.

Health & Science Technologies

  • Sales of $227.3 million reflected a 1 percent increase compared to the fourth quarter of 2018 (-3 percent organic and +4 percent acquisition).
  • Operating income of $49.1 million resulted in an operating margin of 21.6 percent. Excluding $2.7 million of restructuring expenses, adjusted operating income was $51.8 million with an adjusted operating margin of 22.8 percent, a 60 basis point decrease compared to the prior year period primarily due to higher engineering costs.
  • EBITDA of $58.6 million resulted in an EBITDA margin of 25.8 percent. Excluding $2.7 million of restructuring expenses, adjusted EBITDA of $61.3 million resulted in an adjusted EBITDA margin of 27.0 percent, a 80 basis point decrease compared to the prior year period.

Fire & Safety/Diversified Products

  • Sales of $152.0 million were flat compared to the fourth quarter of 2018 (+1 percent organic and -1 percent foreign currency translation).
  • Operating income of $39.3 million resulted in an operating margin of 25.9 percent. Excluding $0.4 million of restructuring expenses, adjusted operating income was $39.7 million with an adjusted operating margin of 26.2 percent, a 30 basis point decrease compared to the prior year period primarily due to sales mix.
  • EBITDA of $42.4 million resulted in an EBITDA margin of 27.9 percent. Excluding $0.4 million of restructuring expenses, adjusted EBITDA of $42.8 million resulted in an adjusted EBITDA margin of 28.2 percent, a 70 basis point decrease compared to the prior year period.

For the fourth quarter of 2019, Fluid & Metering Technologies contributed 38 percent of sales, 41 percent of operating income and 40 percent of EBITDA; Health & Science Technologies accounted for 37 percent of sales, 33 percent of operating income and 35 percent of EBITDA; and Fire & Safety/Diversified Products represented 25 percent of sales, 26 percent of operating income and 25 percent of EBITDA.

Corporate Costs

Corporate costs decreased to $14.2 million in the fourth quarter of 2019 from $18.7 million in the fourth quarter of 2018 primarily as a result of lower variable compensation costs in 2019 compared to prior year period.

Corporate costs decreased to $69.2 million in 2019 compared to $78.7 million in 2018 as a result of lower variable compensation costs in 2019 compared to prior year.

Acquisition

On January 29, 2020, the Company entered into a definitive agreement to acquire Flow Management Devices, LLC (Flow MD) for cash consideration of $125 million. Flow MD is based in Phoenix, Arizona and is a leading provider of small volume provers used in the oil and gas industry. Flow MD has annual revenues of approximately $60 million and will be part of our Energy business within the Fluid and Metering Technologies segment. We expect to close the transaction by the end of the first quarter 2020 subject to regulatory approvals and customary closing conditions.

Restructuring Actions

The Company recorded $7.0 million and $21.0 million of restructuring expenses in the fourth quarter and full year 2019, respectively, to facilitate long-term, sustainable growth through cost reduction actions, primarily consisting of employee reductions, facility rationalization and impairment charges. The full year 2019 restructuring actions included a $9.7 million impairment charge recorded in the third quarter related to the winding down of a business 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 gross profit is calculated as gross profit plus the fair value inventory step-up charge.
  • Adjusted gross profit margin is calculated as adjusted gross profit divided by net sales.
  • Adjusted operating income is calculated as operating income plus the fair value inventory step-up charge 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 the fair value inventory step-up charge plus restructuring expenses, net of the statutory tax expense or benefit.
  • Adjusted EPS is calculated as adjusted net income divided by diluted weighted average shares.
  • 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 the fair value inventory step-up charge plus restructuring expenses.
  • Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by net sales.
  • 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

 

For the Quarter Ended December 31,
2019

 

For the Year Ended December 31,
2019

 

FMT

 

HST

 

FSDP

 

IDEX

 

FMT

 

HST

 

FSDP

 

IDEX

Change in net sales

(4

)%

 

1

%

 

%

 

(1

)%

 

1

%

 

2

%

 

(2

)%

 

%

- Net impact from acquisitions

%

 

4

%

 

%

 

2

%

 

%

 

2

%

 

%

 

1

%

- Impact from FX

(1

)%

 

%

 

(1

)%

 

(1

)%

 

(1

)%

 

(1

)%

 

(2

)%

 

(2

)%

Change in organic net sales

(3

)%

 

(3

)%

 

1

%

 

(2

)%

 

2

%

 

1

%

 

%

 

1

%

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

 

For the Quarter Ended December 31,

 

For the Year Ended December 31,

 

2019

 

2018

 

2019

 

2018

Gross profit

$

266,885

 

 

$

273,643

 

 

$

1,125,034

 

 

$

1,117,895

 

+ Fair value inventory step-up charge

 

 

 

 

3,340

 

 

 

Adjusted gross profit

$

266,885

 

 

$

273,643

 

 

$

1,128,374

 

 

$

1,117,895

 

 

 

 

 

 

 

 

 

Net sales

$

605,997

 

 

$

614,094

 

 

$

2,494,573

 

 

$

2,483,666

 

 

 

 

 

 

 

 

 

Gross margin

44.0

%

 

44.6

%

 

45.1

%

 

45.0

%

Adjusted gross margin

44.0

%

 

44.6

%

 

45.2

%

 

45.0

%

Table 3: Reconciliations of Reported-to-Adjusted Operating Income and Margin (dollars in thousands)

 

For the Quarter Ended December 31,

 

2019

 

2018

 

FMT

 

HST

 

FSDP

 

Corporate

 

IDEX

 

FMT

 

HST

 

FSDP

 

Corporate

 

IDEX

Reported operating income (loss)

$

61,763

 

 

$

49,113

 

 

$

39,349

 

 

$

(16,052

)

 

$134,173

 

$

67,911

 

 

$

52,160

 

 

$

38,439

 

 

$

(19,069

)

 

$139,441

+ Restructuring expenses

1,949

 

 

2,723

 

 

441

 

 

1,849

 

 

6,962

 

 

1,145

 

 

606

 

 

1,757

 

 

324

 

 

3,832

 

Adjusted operating income (loss)

$

63,712

 

 

$

51,836

 

 

$

39,790

 

 

$

(14,203

)

 

$

141,135

 

 

$

69,056

 

 

$

52,766

 

 

$

40,196

 

 

$

(18,745

)

 

$

143,273

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales (eliminations)

$

227,456

 

 

$

227,293

 

 

$

152,025

 

 

$

(777

)

 

$

605,997

 

 

$

237,206

 

 

$

225,515

 

 

$

151,723

 

 

$

(350

)

 

$

614,094

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported operating margin

27.2

%

 

21.6

%

 

25.9

%

 

n/m

 

22.1

%

 

28.6

%

 

23.1

%

 

25.3

%

 

n/m

 

22.7

%

Adjusted operating margin

28.0

%

 

22.8

%

 

26.2

%

 

n/m

 

23.3

%

 

29.1

%

 

23.4

%

 

26.5

%

 

n/m

 

23.3

%

 

For the Year Ended December 31,

 

2019

 

2018

 

FMT

 

HST

 

FSDP

 

Corporate

 

IDEX

 

FMT

 

HST

 

FSDP

 

Corporate

 

IDEX

Reported operating income (loss)

$

285,256

 

 

$

200,200

 

 

$

165,258

 

 

$

(71,711

)

 

$579,003

 

$

275,060

 

 

$

205,679

 

 

$

168,601

 

 

$

(80,252

)

 

$569,088

+ Restructuring expenses

2,879

 

 

14,249

 

 

1,364

 

 

2,552

 

 

21,044

 

 

2,458

 

 

5,904

 

 

2,184

 

 

1,537

 

 

12,083

 

+ Fair value inventory step-up charge

 

 

3,340

 

 

 

 

 

 

3,340

 

 

 

 

 

 

 

 

 

 

 

Adjusted operating income (loss)

$

288,135

 

 

$

217,789

 

 

$

166,622

 

 

$

(69,159

)

 

$

603,387

 

 

$

277,518

 

 

$

211,583

 

 

$

170,785

 

 

$

(78,715

)

 

$

581,171

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales (eliminations)

$

957,028

 

 

$

914,446

 

 

$

626,770

 

 

$

(3,671

)

 

$

2,494,573

 

 

$

951,552

 

 

$

896,419

 

 

$

637,028

 

 

$

(1,333

)

 

$

2,483,666

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported operating margin

29.8

%

 

21.9

%

 

26.4

%

 

n/m

 

23.2

%

 

28.9

%

 

22.9

%

 

26.5

%

 

n/m

 

22.9

%

Adjusted operating margin

30.1

%

 

23.8

%

 

26.6

%

 

n/m

 

24.2

%

 

29.2

%

 

23.6

%

 

26.8

%

 

n/m

 

23.4

%

Table 4: Reconciliations of Reported-to-Adjusted Net Income and EPS (in thousands, except EPS)

 

For the Quarter Ended
December 31,

 

For the Year Ended
December 31,

 

2019

 

2018

 

2019

 

2018

Reported net income

$

96,850

 

 

$

98,137

 

 

$

425,521

 

 

$

410,573

 

+ Restructuring expenses

6,962

 

 

3,832

 

 

21,044

 

 

12,083

 

+ Tax impact on restructuring expenses

(1,630

)

 

(1,029

)

 

(4,966

)

 

(3,032

)

+ Fair value inventory step-up charge

 

 

 

 

3,340

 

 

 

+ Tax impact on fair value inventory step-up charge

 

 

 

 

(735

)

 

 

Adjusted net income

$

102,182

 

 

$

100,940

 

 

$

444,204

 

 

$

419,624

 

 

For the Quarter Ended
December 31,

 

For the Year Ended
December 31,

 

2019

 

2018

 

2019

 

2018

Reported EPS

$

1.26

 

 

$

1.27

 

 

$

5.56

 

 

$

5.29

 

+ Restructuring expenses

0.09

 

 

0.05

 

 

0.28

 

 

0.16

 

+ Tax impact on restructuring expenses

(0.02

)

 

(0.01

)

 

(0.07

)

 

(0.04

)

+ Fair value inventory step-up charge

 

 

 

 

0.04

 

 

 

+ Tax impact on fair value inventory step-up charge

 

 

 

 

(0.01

)

 

 

Adjusted EPS

$

1.33

 

 

$

1.31

 

 

$

5.80

 

 

$

5.41

 

 

 

 

 

 

 

 

 

Diluted weighted average shares

76,570

 

 

77,100

 

 

76,454

 

 

77,563

 

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

 

For the Quarter Ended December 31,

 

2019

 

2018

 

FMT

 

HST

 

FSDP

 

Corporate

 

IDEX

 

FMT

 

HST

 

FSDP

 

Corporate

 

IDEX

Reported operating income (loss)

$

61,763

 

 

$

49,113

 

 

$

39,349

 

 

$

(16,052

)

 

$

134,173

 

 

$

67,911

 

 

$

52,160

 

 

$

38,439

 

 

$

(19,069

)

 

$

139,441

 

- Other (income) expense - net

(137

)

 

805

 

 

498

 

 

(108

)

 

1,058

 

 

295

 

 

(912

)

 

(120

)

 

317

 

 

(420

)

+ Depreciation and amortization

5,499

 

 

10,283

 

 

3,588

 

 

160

 

 

19,530

 

 

5,469

 

 

9,079

 

 

3,581

 

 

185

 

 

18,314

 

EBITDA

67,399

 

 

58,591

 

 

42,439

 

 

(15,784

)

 

152,645

 

 

73,085

 

 

62,151

 

 

42,140

 

 

(19,201

)

 

158,175

 

- Interest expense

 

 

 

 

 

 

 

 

11,079

 

 

 

 

 

 

 

 

 

 

11,036

 

- Provision for income taxes

 

 

 

 

 

 

 

 

25,186

 

 

 

 

 

 

 

 

 

 

30,688

 

- Depreciation and amortization

 

 

 

 

 

 

 

 

19,530

 

 

 

 

 

 

 

 

 

 

18,314

 

Reported net income

 

 

 

 

 

 

 

 

$

96,850

 

 

 

 

 

 

 

 

 

 

$

98,137

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales (eliminations)

$

227,456

 

 

$

227,293

 

 

$

152,025

 

 

$

(777

)

 

$

605,997

 

 

$

237,206

 

 

$

225,515

 

 

$

151,723

 

 

$

(350

)

 

$

614,094

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported operating margin

27.2

%

 

21.6

%

 

25.9

%

 

n/m

 

22.1

%

 

28.6

%

 

23.1

%

 

25.3

%

 

n/m

 

22.7

%

EBITDA margin

29.6

%

 

25.8

%

 

27.9

%

 

n/m

 

25.2

%

 

30.8

%

 

27.6

%

 

27.8

%

 

n/m

 

25.8

%

 

For the Year Ended December 31,

 

2019

 

2018

 

FMT

 

HST

 

FSDP

 

Corporate

 

IDEX

 

FMT

 

HST

 

FSDP

 

Corporate

 

IDEX

Reported operating income (loss)

$

285,256

 

 

$

200,200

 

 

$

165,258

 

 

$

(71,711

)

 

$

579,003

 

 

$

275,060

 

 

$

205,679

 

 

$

168,601

 

 

$

(80,252

)

 

$

569,088

 

- Other (income) expense - net

475

 

 

2,441

 

 

771

 

 

(1,928

)

 

1,759

 

 

1,351

 

 

(1,192

)

 

(3,444

)

 

(700

)

 

(3,985

)

+ Depreciation and amortization

22,152

 

 

39,721

 

 

14,333

 

 

670

 

 

76,876

 

 

22,370

 

 

39,939

 

 

14,493

 

 

742

 

 

77,544

 

EBITDA

306,933

 

 

237,480

 

 

178,820

 

 

(69,113

)

 

654,120

 

 

296,079

 

 

246,810

 

 

186,538

 

 

(78,810

)

 

650,617

 

- Interest expense

 

 

 

 

 

 

 

 

44,341

 

 

 

 

 

 

 

 

 

 

44,134

 

- Provision for income taxes

 

 

 

 

 

 

 

 

107,382

 

 

 

 

 

 

 

 

 

 

118,366

 

- Depreciation and amortization

 

 

 

 

 

 

 

 

76,876

 

 

 

 

 

 

 

 

 

 

77,544

 

Reported net income

 

 

 

 

 

 

 

 

$425,521

 

 

 

 

 

 

 

 

 

$410,573

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales (eliminations)

$

957,028

 

 

$

914,446

 

 

$

626,770

 

 

$

(3,671

)

 

$

2,494,573

 

 

$

951,552

 

 

$

896,419

 

 

$

637,028

 

 

$

(1,333

)

 

$

2,483,666

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported operating margin

29.8

%

 

21.9

%

 

26.4

%

 

n/m

 

23.2

%

 

28.9

%

 

22.9

%

 

26.5

%

 

n/m

 

22.9

%

EBITDA margin

32.1

%

 

26.0

%

 

28.5

%

 

n/m

 

26.2

%

 

31.1

%

 

27.5

%

 

29.3

%

 

n/m

 

26.2

%

Table 6: Reconciliations of EBITDA to Adjusted EBITDA (dollars in thousands)

 

For the Quarter Ended December 31,

 

2019

 

2018

 

FMT

 

HST

 

FSDP

 

Corporate

 

IDEX

 

FMT

 

HST

 

FSDP

 

Corporate

 

IDEX

EBITDA

$

67,399

 

 

$

58,591

 

 

$

42,439

 

 

$

(15,784

)

 

$

152,645

 

 

$

73,085

 

 

$

62,151

 

 

$

42,140

 

 

$

(19,201

)

 

$

158,175

 

+ Restructuring expenses

1,949

 

 

2,723

 

 

441

 

 

1,849

 

 

6,962

 

 

1,145

 

 

606

 

 

1,757

 

 

324

 

 

3,832

 

Adjusted EBITDA

$

69,348

 

 

$

61,314

 

 

$

42,880

 

 

$

(13,935

)

 

$

159,607

 

 

$

74,230

 

 

$

62,757

 

 

$

43,897

 

 

$

(18,877

)

 

$

162,007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA margin

30.5

%

 

27.0

%

 

28.2

%

 

n/m

 

26.3

%

 

31.3

%

 

27.8

%

 

28.9

%

 

n/m

 

26.4

%

 

For the Year Ended December 31,

 

2019

 

2018

 

FMT

 

HST

 

FSDP

 

Corporate

 

IDEX

 

FMT

 

HST

 

FSDP

 

Corporate

 

IDEX

EBITDA

$

306,933

 

 

$

237,480

 

 

$

178,820

 

 

$

(69,113

)

 

$

654,120

 

 

$

296,079

 

 

$

246,810

 

 

$

186,538

 

 

$

(78,810

)

 

$

650,617

 

+ Restructuring expenses

2,879

 

 

14,249

 

 

1,364

 

 

2,552

 

 

21,044

 

 

2,458

 

 

5,904

 

 

2,184

 

 

1,537

 

 

12,083

 

+ Fair value inventory step-up charge

 

 

3,340

 

 

 

 

 

 

3,340

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

309,812

 

 

$

255,069

 

 

$

180,184

 

 

$

(66,561

)

 

$

678,504

 

 

$

298,537

 

 

$

252,714

 

 

$

188,722

 

 

$

(77,273

)

 

$

662,700

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA margin

32.4

%

 

27.9

%

 

28.7

%

 

n/m

 

27.2

%

 

31.4

%

 

28.2

%

 

29.6

%

 

n/m

 

26.7

%

Table 7: Reconciliations of Free Cash Flow (in thousands)

 

For the Quarter Ended

 

For the Year Ended
December 31,

 

December 31,

 

September 30,

 

 

2019

 

2018

 

2019

 

2019

 

2018

Cash flow from operating activities

$

151,160

 

 

$

153,592

 

 

$

157,064

 

 

$

528,062

 

 

$

479,345

 

- Capital expenditures

14,139

 

 

16,233

 

 

11,031

 

 

50,912

 

 

56,089

 

Free cash flow

$

137,021

 

 

$

137,359

 

 

$

146,033

 

 

$

477,150

 

 

$

423,256

 

Conference Call to be Broadcast over the Internet

IDEX will broadcast its fourth quarter earnings conference call over the Internet on Thursday, January 30, 2020 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 #13694803.

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 for per share amounts)

(unaudited)

 

For the Quarter Ended
December 31,

 

For the Year Ended
December 31,

 

2019

 

2018

 

2019

 

2018

Net sales

$

605,997

 

 

$

614,094

 

 

$

2,494,573

 

 

$

2,483,666

 

Cost of sales

339,112

 

 

340,451

 

 

1,369,539

 

 

1,365,771

 

Gross profit

266,885

 

 

273,643

 

 

1,125,034

 

 

1,117,895

 

Selling, general and administrative expenses

125,750

 

 

130,370

 

 

524,987

 

 

536,724

 

Restructuring expenses

6,962

 

 

3,832

 

 

21,044

 

 

12,083

 

Operating income

134,173

 

 

139,441

 

 

579,003

 

 

569,088

 

Other (income) expense - net

1,058

 

 

(420

)

 

1,759

 

 

(3,985

)

Interest expense

11,079

 

 

11,036

 

 

44,341

 

 

44,134

 

Income before income taxes

122,036

 

 

128,825

 

 

532,903

 

 

528,939

 

Provision for income taxes

25,186

 

 

30,688

 

 

107,382

 

 

118,366

 

Net income

$

96,850

 

 

$

98,137

 

 

$

425,521

 

 

$

410,573

 

 

 

 

 

 

 

 

 

Earnings per Common Share:

 

 

 

 

 

 

 

Basic earnings per common share

$

1.28

 

 

$

1.29

 

 

$

5.62

 

 

$

5.36

 

Diluted earnings per common share

$

1.26

 

 

$

1.27

 

 

$

5.56

 

 

$

5.29

 

 

 

 

 

 

 

 

 

Share Data:

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

75,779

 

 

76,128

 

 

75,594

 

 

76,412

 

Diluted weighted average common shares outstanding

76,570

 

 

77,100

 

 

76,454

 

 

77,563

 

IDEX CORPORATION

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

December 31,
2019

 

December 31,
2018

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

632,581

 

 

$

466,407

 

Receivables - net

298,186

 

 

312,192

 

Inventories

293,467

 

 

279,995

 

Other current assets

37,211

 

 

33,938

 

Total current assets

1,261,445

 

 

1,092,532

 

Property, plant and equipment - net

280,316

 

 

281,220

 

Goodwill and intangible assets

2,167,776

 

 

2,081,282

 

Other noncurrent assets

104,375

 

 

18,823

 

Total assets

$

3,813,912

 

 

$

3,473,857

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

Current liabilities

 

 

 

Trade accounts payable

$

138,463

 

 

$

143,196

 

Accrued expenses

180,290

 

 

187,536

 

Short-term borrowings

388

 

 

483

 

Dividends payable

38,736

 

 

33,446

 

Total current liabilities

357,877

 

 

364,661

 

Long-term borrowings

848,864

 

 

848,335

 

Other noncurrent liabilities

343,942

 

 

266,221

 

Total liabilities

1,550,683

 

 

1,479,217

 

Shareholders' equity

2,263,229

 

 

1,994,640

 

Total liabilities and shareholders' equity

$

3,813,912

 

 

$

3,473,857

 

IDEX CORPORATION

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

For the Year Ended
December 31,

 

2019

 

2018

Cash flows from operating activities

 

 

 

Net income

$

425,521

 

 

$

410,573

 

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

 

 

 

Loss on sale of fixed assets - net

156

 

 

946

 

Asset impairments

10,155

 

 

 

Depreciation and amortization

39,543

 

 

39,049

 

Amortization of intangible assets

37,333

 

 

38,495

 

Amortization of debt issuance expenses

1,355

 

 

1,332

 

Share-based compensation expense

27,669

 

 

24,754

 

Deferred income taxes

6,625

 

 

(4,345

)

Non-cash interest expense associated with forward starting swaps

6,327

 

 

6,475

 

Changes in (net of the effect from acquisitions):

 

 

 

Receivables

22,338

 

 

(23,419

)

Inventories

(3,322

)

 

(23,031

)

Other current assets

(2,361

)

 

25,162

 

Trade accounts payable

(9,115

)

 

(1,220

)

Accrued expenses

(37,086

)

 

4,148

 

Other - net

2,924

 

 

(19,574

)

Net cash flows provided by operating activities

528,062

 

 

479,345

 

Cash flows from investing activities

 

 

 

Purchases of property, plant and equipment

(50,912

)

 

(56,089

)

Purchase of intellectual property

 

 

(4,000

)

Acquisition of businesses, net of cash acquired

(87,180

)

 

(20,205

)

Proceeds from disposal of fixed assets

962

 

 

363

 

Other - net

115

 

 

(1,500

)

Net cash flows used in investing activities

(137,015

)

 

(81,431

)

Cash flows from financing activities

 

 

 

Payments under revolving credit facilities

 

 

(11,284

)

Payments under other long term borrowings

(50,057

)

 

 

Dividends paid

(147,208

)

 

(127,478

)

Proceeds from stock option exercises

38,809

 

 

27,639

 

Purchases of common stock

(54,668

)

 

(173,926

)

Shares surrendered for tax withholding

(12,596

)

 

(11,555

)

Settlement of foreign exchange contracts

--

 

 

6,593

 

Other

(1,865

)

 

--

 

Net cash flows used in financing activities

(227,585

)

 

(290,011

)

Effect of exchange rate changes on cash and cash equivalents

2,712

 

 

(17,446

)

Net increase in cash

166,174

 

 

90,457

 

Cash and cash equivalents at beginning of year

466,407

 

 

375,950

 

Cash and cash equivalents at end of period

$

632,581

 

 

$

466,407

 

IDEX CORPORATION

Company and Segment Financial Information - Reported

(dollars in thousands)

(unaudited)

 

For the Quarter Ended
December 31, (a)

 

For the Year Ended
December 31, (a)

 

2019

 

2018

 

2019

 

2018

Fluid & Metering Technologies

 

 

 

 

 

 

 

Net sales

$

227,456

 

 

$

237,206

 

 

$

957,028

 

 

$

951,552

 

Operating income (b)

61,763

 

 

67,911

 

 

285,256

 

 

275,060

 

Operating margin

27.2

%

 

28.6

%

 

29.8

%

 

28.9

%

EBITDA

$

67,399

 

 

$

73,085

 

 

$

306,933

 

 

$

296,079

 

EBITDA margin

29.6

%

 

30.8

%

 

32.1

%

 

31.1

%

Depreciation and amortization

$

5,499

 

 

$

5,469

 

 

$

22,152

 

 

$

22,370

 

Capital expenditures

7,078

 

 

4,399

 

 

17,285

 

 

19,541

 

 

 

 

 

 

 

 

 

Health & Science Technologies

 

 

 

 

 

 

 

Net sales

$

227,293

 

 

$

225,515

 

 

$

914,446

 

 

$

896,419

 

Operating income (b)

49,113

 

 

52,160

 

 

200,200

 

 

205,679

 

Operating margin

21.6

%

 

23.1

%

 

21.9

%

 

22.9

%

EBITDA

$

58,591

 

 

$

62,151

 

 

$

237,480

 

 

$

246,810

 

EBITDA margin

25.8

%

 

27.6

%

 

26.0

%

 

27.5

%

Depreciation and amortization

$

10,283

 

 

$

9,079

 

 

$

39,721

 

 

$

39,939

 

Capital expenditures

5,800

 

 

8,743

 

 

22,001

 

 

26,039

 

 

 

 

 

 

 

 

 

Fire & Safety/Diversified Products

 

 

 

 

 

 

 

Net sales

$

152,025

 

 

$

151,723

 

 

$

626,770

 

 

$

637,028

 

Operating income (b)

39,349

 

 

38,439

 

 

165,258

 

 

168,601

 

Operating margin

25.9

%

 

25.3

%

 

26.4

%

 

26.5

%

EBITDA

$

42,439

 

 

$

42,140

 

 

$

178,820

 

 

$

186,538

 

EBITDA margin

27.9

%

 

27.8

%

 

28.5

%

 

29.3

%

Depreciation and amortization

$

3,588

 

 

$

3,581

 

 

$

14,333

 

 

$

14,493

 

Capital expenditures

1,067

 

 

3,086

 

 

9,811

 

 

10,318

 

 

 

 

 

 

 

 

 

Corporate Office and Eliminations

 

 

 

 

 

 

 

Intersegment sales eliminations

$

(777

)

 

$

(350

)

 

$

(3,671

)

 

$

(1,333

)

Operating income (b)

(16,052

)

 

(19,069

)

 

(71,711

)

 

(80,252

)

EBITDA

(15,784

)

 

(19,201

)

 

(69,113

)

 

(78,810

)

Depreciation and amortization

160

 

 

185

 

 

670

 

 

742

 

Capital expenditures

194

 

 

5

 

 

1,815

 

 

191

 

 

 

 

 

 

 

 

 

Company

 

 

 

 

 

 

 

Net sales

$

605,997

 

 

$

614,094

 

 

$

2,494,573

 

 

$

2,483,666

 

Operating income

134,173

 

 

139,441

 

 

579,003

 

 

569,088

 

Operating margin

22.1

%

 

22.7

%

 

23.2

%

 

22.9

%

EBITDA

$

152,645

 

 

$

158,175

 

 

$

654,120

 

 

$

650,617

 

EBITDA margin

25.2

%

 

25.8

%

 

26.2

%

 

26.2

%

Depreciation and amortization (c)

$

19,530

 

 

$

18,314

 

 

$

76,876

 

 

$

77,544

 

Capital expenditures

14,139

 

 

16,233

 

 

50,912

 

 

56,089

 

IDEX CORPORATION

Company and Segment Financial Information - Adjusted

(dollars in thousands)

(unaudited)

 

For the Quarter Ended
December 31, (a)

 

For the Year Ended
December 31, (a)

 

2019

 

2018

 

2019

 

2018

Fluid & Metering Technologies

 

 

 

 

 

 

 

Net sales

$

227,456

 

 

$

237,206

 

 

$

957,028

 

 

$

951,552

 

Adjusted operating income (b)

63,712

 

 

69,056

 

 

288,135

 

 

277,518

 

Adjusted operating margin

28.0

%

 

29.1

%

 

30.1

%

 

29.2

%

Adjusted EBITDA

$

69,348

 

 

$

74,230

 

 

$

309,812

 

 

$

298,537

 

Adjusted EBITDA margin

30.5

%

 

31.3

%

 

32.4

%

 

31.4

%

Depreciation and amortization

$

5,499

 

 

$

5,469

 

 

$

22,152

 

 

$

22,370

 

Capital expenditures

7,078

 

 

4,399

 

 

17,285

 

 

19,541

 

 

 

 

 

 

 

 

 

Health & Science Technologies

 

 

 

 

 

 

 

Net sales

$

227,293

 

 

$

225,515

 

 

$

914,446

 

 

$

896,419

 

Adjusted operating income (b)

51,836

 

 

52,766

 

 

217,789

 

 

211,583

 

Adjusted operating margin

22.8

%

 

23.4

%

 

23.8

%

 

23.6

%

Adjusted EBITDA

$

61,314

 

 

$

62,757

 

 

$

255,069

 

 

$

252,714

 

Adjusted EBITDA margin

27.0

%

 

27.8

%

 

27.9

%

 

28.2

%

Depreciation and amortization

$

10,283

 

 

$

9,079

 

 

$

39,721

 

 

$

39,939

 

Capital expenditures

5,800

 

 

8,743

 

 

22,001

 

 

26,039

 

 

 

 

 

 

 

 

 

Fire & Safety/Diversified Products

 

 

 

 

 

 

 

Net sales

$

152,025

 

 

$

151,723

 

 

$

626,770

 

 

$

637,028

 

Adjusted operating income (b)

39,790

 

 

40,196

 

 

166,622

 

 

170,785

 

Adjusted operating margin

26.2

%

 

26.5

%

 

26.6

%

 

26.8

%

Adjusted EBITDA

$

42,880

 

 

$

43,897

 

 

$

180,184

 

 

$

188,722

 

Adjusted EBITDA margin

28.2

%

 

28.9

%

 

28.7

%

 

29.6

%

Depreciation and amortization

$

3,588

 

 

$

3,581

 

 

$

14,333

 

 

$

14,493

 

Capital expenditures

1,067

 

 

3,086

 

 

9,811

 

 

10,318

 

 

 

 

 

 

 

 

 

Corporate Office and Eliminations

 

 

 

 

 

 

 

Intersegment sales eliminations

$

(777

)

 

$

(350

)

 

$

(3,671

)

 

$

(1,333

)

Adjusted operating income (b)

(14,203

)

 

(18,745

)

 

(69,159

)

 

(78,715

)

Adjusted EBITDA

(13,935

)

 

(18,877

)

 

(66,561

)

 

(77,273

)

Depreciation and amortization

160

 

 

185

 

 

670

 

 

742

 

Capital expenditures

194

 

 

5

 

 

1,815

 

 

191

 

 

 

 

 

 

 

 

 

Company

 

 

 

 

 

 

 

Net sales

$

605,997

 

 

$

614,094

 

 

$

2,494,573

 

 

$

2,483,666

 

Adjusted operating income

141,135

 

 

143,273

 

 

603,387

 

 

581,171

 

Adjusted operating margin

23.3

%

 

23.3

%

 

24.2

%

 

23.4

%

Adjusted EBITDA

$

159,607

 

 

$

162,007

 

 

$

678,504

 

 

$

662,700

 

Adjusted EBITDA margin

26.3

%

 

26.4

%

 

27.2

%

 

26.7

%

Depreciation and amortization (c)

$

19,530

 

 

$

18,314

 

 

$

76,876

 

 

$

77,544

 

Capital expenditures

14,139

 

 

16,233

 

 

50,912

 

 

56,089

 

(a)

Three and twelve months data include the results of Velcora Holding AB (July 2019) and 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

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

Contacts

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