IDEX Reports First Quarter Results

IDEX Corporation (NYSE: IEX) today announced its financial results for the three month period ended March 31, 2023.

“The markets served by our Health & Science Technologies businesses have strong fundamental secular growth trends. We remain well-positioned, solving difficult problems with customers on the cutting edge of new technologies, and our organic and inorganic pipeline supports our aspirations to deliver outstanding business performance.”

“IDEX delivered strong results in the first quarter,” said Eric D. Ashleman, IDEX Corporation Chief Executive Officer and President. “We achieved record sales with positive organic growth across all three of our segments, earnings per share above the high end of our guidance, and strong free cash flow. Strength in our Fluid & Metering Technologies and our Fire & Safety / Diversified Products businesses provided near-term mitigation against the impacts of the anticipated inventory correction experienced within our Health & Science Technologies businesses.”

“As we progressed through the quarter, customers across our Health & Science Technologies segment indicated a larger, more prolonged inventory correction than previously communicated. End market demand is still positive, but we believe our customers have sufficient inventory of our critical components to support that demand. With the revised 2023 revenue growth outlook for Health & Science Technologies now negative, we have proactively executed targeted cost reductions to offset a portion of this pressure. Based on our current outlook, we are lowering our full year 2023 adjusted EPS guidance to $8.25 to $8.55 per share.”

“The markets served by our Health & Science Technologies businesses have strong fundamental secular growth trends. We remain well-positioned, solving difficult problems with customers on the cutting edge of new technologies, and our organic and inorganic pipeline supports our aspirations to deliver outstanding business performance.” Ashleman continued, “We continue to execute on our strong M&A strategy and are excited to announce our intent to acquire Iridian Spectral Technologies for 150 million Canadian dollars. This highly strategic asset brings capabilities that expand our optical filters portfolio serving the space, life science and telecommunications markets. We expect this transaction to close in the second quarter, subject to customary closing conditions.”

2023 Outlook

Full year 2023 organic sales growth is projected to be 0 to 3 percent over the prior year period, with GAAP EPS of $7.30 to $7.60 (adjusted EPS of $8.25 to $8.55).

Second quarter 2023 organic sales growth is projected to be approximately 3 percent, with GAAP EPS of $1.86 to $1.89 (adjusted EPS of $2.10 to $2.13).

Consolidated Results

Orders

First quarter 2023 orders of $825.5 million reflected a 4 percent decrease compared with the prior year period (-10 percent organic, +8 percent acquisitions/divestitures and -2 percent foreign currency translation).

Net Sales

First quarter 2023 sales of $845.4 million reflected a 13 percent increase compared with the prior year period (+6 percent organic, +9 percent acquisitions/divestitures and -2 percent foreign currency translation).

Gross Margin

First quarter 2023 gross margin of 45.2 percent decreased 40 basis points compared with the prior year period primarily due to unfavorable mix largely centered in HST, the dilutive impact of acquisitions and employee-related inflation, partially offset by favorable productivity and price/cost.

Net Income and Earnings per Share Attributable to IDEX

First quarter 2023 net income attributable to IDEX of $139.8 million was flat compared with the prior year period and resulted in EPS attributable to IDEX of $1.84 per share, an increase of 1 cent per share, or 1 percent, from the prior year period. The first quarter 2023 effective tax rate of 22.2 percent was relatively consistent compared with the first quarter 2022 effective tax rate of 22.4 percent. Adjusted EPS attributable to IDEX, which reflects the impact of non-GAAP adjustments, net of related taxes, was $2.09 per share, an increase of 13 cents per share, or 7 percent, from the prior year period.

Net Income Margin and Adjusted EBITDA Margin

First quarter 2023 net income margin of 16.5 percent decreased 210 basis points compared with the prior year period. The decrease was driven by higher amortization on new acquisitions, increases in employee-related costs, which includes an additional $5.8 million of accelerated stock compensation costs for retiree eligible participants as compared with the prior year period, higher discretionary spending and unfavorable mix, partially offset by strong productivity and price/cost as well as higher volume leverage. First quarter 2023 Adjusted EBITDA margin of 27.2 percent, which reflects the impact of non-GAAP adjustments, decreased 140 basis points compared with the prior year period.

Cash Flow

First quarter 2023 cash from operations of $147.9 million was up 86% primarily due to lower investments in working capital in 2023 as compared with 2022. First quarter 2023 free cash flow included higher capital expenditures and was $121.3 million, up 91% compared with the prior year period and constituted 76 percent of adjusted net income attributable to IDEX.

Segment Highlights

Fluid & Metering Technologies (“FMT”)

• First quarter 2023 sales of $321.8 million reflected an 18 percent increase compared with the first quarter of 2022 (+9 percent organic, +11 percent acquisitions/divestitures and -2 percent foreign currency translation).
• First quarter 2023 Adjusted EBITDA margin was 33.0%, up 50 basis points compared with the prior year period primarily due to strong price/cost and productivity as well as higher volume leverage, partially offset by increases in employee-related costs and discretionary spending and the dilutive impact of acquisitions.

Health & Science Technologies (“HST”)

• First quarter 2023 sales of $351.0 million reflected an 11 percent increase compared with the first quarter of 2022 (+3 percent organic, +11 percent acquisitions and -3 percent foreign currency translation).
• First quarter 2023 Adjusted EBITDA margin was 28.7%, down 300 basis points compared with the prior year period primarily due to increases in employee-related costs, unfavorable mix and lower volume leverage, partially offset by favorable price/cost and the accretive impact of the Muon acquisition.

Fire & Safety/Diversified Products (“FSDP”)

• First quarter 2023 sales of $174.4 million reflected a 6 percent increase compared with the first quarter of 2022 (+9 percent organic and -3 percent foreign currency translation).
• First quarter 2023 Adjusted EBITDA margin was 28.5%, up 160 basis points compared with the prior year period primarily due to strong productivity and price/cost as well as higher volume leverage, partially offset by increases in discretionary spending and employee-related costs and unfavorable mix.

Corporate Costs

Corporate costs included in consolidated Adjusted EBITDA were $26.8 million in the first quarter of 2023, an increase of $8.9 million compared with the prior year period due to increases in employee-related costs, which includes an additional $5.1 million of accelerated stock compensation costs for retiree eligible participants as compared with the prior year period, and higher discretionary spending.

Conference Call to be Broadcast over the Internet

IDEX will broadcast its first quarter earnings conference call over the Internet on Thursday, April 27, 2023 at 9:30 a.m. CT. Chief Executive Officer and President Eric Ashleman 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 #13734462.

Source: https://www.businesswire.com/