IDEX Corporation
CEO : Mr. Eric D. Ashleman
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2023 Q2 | 6.3% YoY | 7.2% | 0.5% | 2023-07-27 |
William Grogan says,
Orders and Sales
- Orders of $766 million were down 9% overall and down 13% organically, mainly due to a 27% organic decrease in HST
- Record sales of $846 million were up 6% overall and up 3% organically
- 10% organic growth within FMT, 8% organic growth within FSD, and 6% organic decrease in HST
Gross Margin and Adjusted EBITDA Margin
- Gross margin of 44.7% decreased by 10 basis points compared with last year
- Adjusted EBITDA margin was 28.4%, up 90 basis points
Net Income and EPS
- Net income was $139 million, resulting in an EPS of $1.82
- Adjusted net income was $165 million, with an adjusted EPS of $2.18, up $0.16 or 8%
Cash Flow and Inventory
- Cash from operations of $141 million was up 26%, primarily due to lower investments in working capital
- Free cash flow for the quarter was $120 million, up 24% versus last year
- Over $20 million of inventory was driven out of the business through targeted reduction efforts
Segment Performance
- Fluid metering technology segment experienced strong sales performance with organic growth of 10%
- Health & Science Technologies segment had a 27% organic order contraction, with sales down 6% organically
- Fire & Safety Diversified Products segment had organic sales growth of 8%
Outlook for Q3 2023 and Full Year
- Projected GAAP EPS for Q3 to range from $1.60 to $1.65, and adjusted EPS to range from $1.84 to $1.89
- Organic revenue expected to decline 7% to 8% in Q3, with adjusted EBITDA margins estimated to be approximately 27%
- Full year organic revenue contraction of 1% to 2% expected, with GAAP EPS of $6.80 to $6.90 and adjusted EPS of $7.90 to $8
Eric Ashleman says,
Strong performance in Fluid and Metering and Fire and Safety businesses
- IDEX delivered record sales and adjusted earnings per share in Q2.
- Fluid and Metering and Fire and Safety businesses showed exceptional performance with strong organic growth and profitability.
- Fluid and Metering business achieved an all-time high EBITDA margin.
Challenges in Health and Science Technologies segment
- The Health and Science Technologies segment faced challenges due to inventory destocking in analytical instrumentation, life sciences, biopharma, and semiconductor markets.
- The segment experienced a 27% year-over-year organic drop in orders in Q2.
Revised outlook for the year
- Industrial businesses are expected to slow moderately in the second half of the year.
- No longer projecting a recovery in HST volumes in the second half of the year.
- Revised forecasts from key customers, considering factors such as supply chain improvements, lower-than-expected growth in China, and overall macro pressures within market verticals.
Revised adjusted EPS guidance
- Full-year 2023 adjusted EPS guidance revised to $7.90 to $8 per share.
- Additional $0.45 of EPS pressure at the midpoint versus previous guidance.
Acquisition of Iridian Spectral Technologies
- Closed on the acquisition of Iridian Spectral Technologies, adding another market leader in custom optical filter solutions for the space, life science, and telecommunications markets.
Focus on driving operational performance and innovation
- Continued focus on driving strong operational performance regardless of the business environment.
- Driving speed and agility within the businesses, reducing inventory, and improving lead times.
- Commitment to managing through the short-term while investing in people, capital deployment, and differentiated technologies for long-term growth.
Q & A sessions,
Positive Impact on Stock’s Movement
- Aggressive capital deployment in best advantage businesses and platforms
- Acquisition of Muon, Sealing Solutions, Optical Technologies, Iridian Spectral Technologies, KZValve, Nexsight, Airtech, and ABEL Pumps to expand product offerings and market reach
- Components orientation allows for maximum tunability and flexibility to pivot resources to fastest-growing mega trends
- Talented people and teams thriving in an outstanding entrepreneurial culture as a competitive advantage
- Close to normal backlog levels and improving order rates
- Rapid recovery and short lead times
Negative Impact on Stock’s Movement
- Hesitancy and reticence to invest in big funding of large capital projects
- Uncertainty in the long-term call on China’s market
- Slow return to traditional growth rates, expected past the next six months and into 2024
- Reluctance to make big capital purchase bets
No bad stock 