IDEX Corporation (NYSE: IEX) today announced its financial
results for the three month period ended September 30,
2015.
Third Quarter 2015
Highlights
- Adjusted EPS of 89 cents with adjusted
operating margin of 21.5 percent
- Free cash flow of $105 million was 132
percent of net income
- Repurchased 911 thousand shares of
common stock for $66 million
- Restructuring actions resulted in a
pre-tax charge of $4.7 million, or 4 cents of EPS
- Ismatec business sold for a pre-tax
gain of $18.1 million, or 17 cents of EPS
- Acquired CiDRA Precision Services
Third Quarter 2015
Orders of $485 million were down 4 percent (-2 percent organic,
+2 percent acquisitions and -4 percent foreign currency
translation) compared with the prior year period. Sales of $504
million were down 6 percent (-4 percent organic, +2 percent
acquisitions and -4 percent foreign currency translation) compared
with the prior year period.
Gross margin of 44.3 percent was up 30 basis points from the
prior year period, while adjusted operating margin of 21.5 percent
was up 70 basis points from the prior year.
Adjusted net income of $69 million decreased 3 percent from the
prior year period, while adjusted earnings per share of 89 cents
increased 1 cent, or 1 percent, from the prior year period.
Adjusted EBITDA of $130 million was 26 percent of sales and covered
interest expense by almost 13 times, while free cash flow of $105
million was 132 percent of net income.
The Company repurchased 911 thousand shares of common stock for
$66 million in the third quarter of 2015. Year-to-date, the Company
has repurchased 2.4 million shares of common stock for $179
million.
IDEX’s third quarter was highlighted by a solid 89 cents of
adjusted EPS and 21.5 percent adjusted operating margins, a 70
basis point operating margin expansion from the third quarter of
2014. Our teams faced continued market headwinds, but executed by
delivering strong margin improvement and $105 million of free cash
flow. North American industrials slowed during the quarter,
contributing to the 2 and 4 percent decreases for organic orders
and sales, respectively.
The challenging third quarter demand environment means we now
expect fourth quarter organic sales to be down 1 to 2 percent, with
full year organic sales down 2 to 3 percent. Restructuring actions
executed in the third quarter will provide incremental efficiencies
going forward. In the third quarter, these actions cost $4.7
million, and the total 2015 cost is now expected to be in the range
of $8 to $10 million. These are permanent cost-out actions and the
full benefit will be realized in 2016.
Continuing to deliver total shareholder returns is critical to
our long term success. Year-to-date we have repurchased 2.4 million
shares for $179 million, deployed nearly $200 million on three
strategic acquisitions across three platforms, retired €81 million
of European private placement notes, and, in the third quarter,
divested our Ismatec business. This was a non-strategic product
line in our Health and Science segment, which sold for $28 million,
and resulted in an $18.1 million pre-tax gain. Additionally, the
acquisition pipeline is very strong, and our free cash flow and
debt capacity allows us to use the strength of our balance sheet
for a steady, disciplined pace of acquisitions for the foreseeable
future.
For the fourth quarter, we expect adjusted EPS in the range 88
to 91 cents and full year 2015 adjusted EPS of $3.50 to $3.53 with
adjusted operating margins of 21 percent. This guidance excludes
the charges from the restructuring actions in the second half of
2015, and the gain from the Ismatec divestiture.”
Andrew K. Silvernail Chairman and Chief Executive Officer
Third Quarter 2015 Segment
Highlights
Fluid & Metering Technologies
- Sales of $212 million reflected a 5
percent decrease compared to the third quarter of 2014 (-4 percent
organic, +3 percent acquisition and -4 percent foreign currency
translation).
- Adjusted operating margin of 23.3
percent represented a 120 basis point decrease compared with the
third quarter of 2014 primarily due to non-cash acquisition fair
value inventory charges recorded in the quarter as well as lower
volume.
- Adjusted EBITDA of $56.8 million
resulted in an adjusted EBITDA margin of 26.8 percent, down 70
basis points compared with the third quarter of 2014.
Health & Science Technologies
- Sales of $185 million reflected a 3
percent decrease compared to the third quarter of 2014 (-3 percent
organic, +4 percent acquisitions and -4 percent foreign currency
translation).
- Adjusted operating margin of 21.7
percent represented a 40 basis point decrease compared with the
third quarter of 2014 primarily due to decreased volume.
- Adjusted EBITDA of $52.2 million
resulted in an adjusted EBITDA margin of 28.2 percent, up 10 basis
points compared with the third quarter of 2014.
Fire & Safety/Diversified Products
- Sales of $107 million reflected an 11
percent decrease compared to the third quarter of 2014 (-5 percent
organic and -6 percent foreign currency translation).
- Adjusted operating margin of 30.7
percent represented a 460 basis point increase compared with the
third quarter of 2014 primarily due to gross margin improvements at
the dispensing and fire suppression platforms driven by favorable
mix within these platforms along with productivity improvements
across the entire segment.
- Adjusted EBITDA of $34.6 million
resulted in an adjusted EBITDA margin of 32.3 percent, up 450 basis
points compared with the third quarter of 2014.
For the third quarter of 2015, Fluid & Metering Technologies
contributed 42 percent of sales, 40 percent of operating income and
39 percent of EBITDA; Health & Science Technologies accounted
for 37 percent of sales, 33 percent of operating income and 36
percent of EBITDA; and Fire & Safety/Diversified Products
represented 21 percent of sales, 27 percent of operating income and
25 percent of EBITDA.
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 in no way are 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.
- Adjusted operating income is calculated
as operating income plus restructuring expenses less the gain on
sale of a business.
- Adjusted operating margin is calculated
as adjusted operating income divided by net sales.
- Adjusted net income is calculated as
net income plus restructuring expenses less the gain on sale of a
business, net of the statutory tax expense/benefit.
- Consolidated EBITDA is calculated as
net income plus interest expense plus provision for income taxes
plus depreciation and amortization; while segment EBITDA is
calculated as operating income plus or minus other income (expense)
plus depreciation and amortization.
- Adjusted EBITDA is calculated as EBITDA
plus restructuring expenses less the gain on sale of a
business.
- Free cash flow is calculated as cash
flow from operating activities less capital expenditures plus the
excess tax benefit from share-based compensation.
Table 1: Reconciliations of Reported-to-Adjusted Operating
Income and Margin (dollars in thousands)
For the
Three Months Ended September 30, 2015 2014
FMT HST FSDP IDEX
FMT HST FSDP IDEX
Reported operating income $ 46,910 $
38,371 $ 32,536 $ 121,813 $
54,791 $ 42,214 $ 31,355 $ 110,847
Restructuring expenses
2,505 1,774 279 4,723 - - - -
Gain
on sale of business - -
- (18,070 )
- - - -
Adjusted operating income $ 49,415
$ 40,145 $ 32,815
$ 108,466 $ 54,791 $ 42,214 $
31,355 $ 110,847
Net sales $
212,101 $ 184,893 $ 107,009
$ 503,791 $ 223,258 $ 190,852 $ 120,313 $ 533,179
Operating margin 22.1 % 20.8 %
30.4 % 24.2 % 24.5 % 22.1 % 26.1 % 20.8
%
Adjusted operating margin 23.3 % 21.7
% 30.7 % 21.5 % 24.5 % 22.1 %
26.1 % 20.8 %
For the Nine Months Ended September 30,
2015 2014 FMT HST
FSDP IDEX FMT HST
FSDP IDEX Reported operating income
$ 154,665 $ 117,888 $
91,180 $ 333,479 $ 166,821 $ 114,580 $ 106,988
$ 336,770
Restructuring expenses 2,505 1,774
279 4,723 - - - -
Gain on sale of business
- - -
(18,070 ) - -
- -
Adjusted operating
income $ 157,170 $ 119,662
$ 91,459 $ 320,132
$ 166,821 $ 114,580 $ 106,988 $ 336,770
Net sales $ 645,642 $
552,418 $ 325,572 $ 1,520,870 $
672,719 $ 562,899 $ 393,779 $ 1,623,868
Operating margin
24.0 % 21.3 % 28.0 %
21.9 % 24.8 % 20.4 % 27.2 % 20.7 %
Adjusted
operating margin 24.3 % 21.7 %
28.1 % 21.0 % 24.8 % 20.4 % 27.2 % 20.7
%
Table 2: Reconciliations of Reported-to-Adjusted Net Income
and EPS (dollars in thousands, except EPS)
For the Three Months For the
Nine Months Ended September 30, Ended September
30, 2015 2014 2015 2014 Reported
net income $ 79,505 $ 71,441
$
215,044 $ 217,766
Restructuring expenses, net of tax
3,085 -
3,085 -
Gain on sale of business, net of
tax (13,231 ) -
(13,231 ) -
Adjusted net income
$ 69,359 $ 71,441
$ 204,898
$ 217,766
Reported EPS $ 1.02 $
0.88
$ 2.75 $ 2.68
Restructuring expenses, net of
tax 0.04 -
0.04 -
Gain on sale of business,
net of tax (0.17 ) -
(0.17 ) -
Adjusted EPS $
0.89 $ 0.88 $ 2.62
$ 2.68
Diluted weighted average shares 77,646
80,561
78,266 81,093
Table 3: Reconciliations of Consolidated EBITDA and Free Cash
Flow (dollars in thousands)
For the Three Months Ended
September 30, June 30, 2015 2014
2015 Net income $ 79,505 $ 71,441 $
69,585
Interest expense 10,229 10,461 10,584
Provision for income taxes 32,772 29,889 28,913
Depreciation and amortization 20,377
19,609 19,087
EBITDA
142,883 131,400 128,169
Restructuring expenses
4,723 - -
Gain on sale of business
(18,070 ) - -
Adjusted
EBITDA $ 129,536 $ 131,400 $
128,169
Cash flow from operating
activities $ 113,353 $ 100,403 $ 99,024
Capital expenditures (8,785 ) (10,521 )
(13,749 )
Excess tax benefit from share-based compensation
267 1,680 863
Free cash flow $ 104,835 $ 91,562
$ 86,138
Table 4: Reconciliations of Segment EBITDA (dollars in
thousands)
For the Three Months
Ended September 30, 2015 2014 FMT
HST FSDP FMT HST
FSDP Operating income $ 46,910 $
38,371 $ 32,536 $ 54,791 $ 42,214 $ 31,355
Other income (expense) 82 877 247 (55 )
420 531
Depreciation and amortization 7,311
11,179 1,513
6,724 11,005 1,597
EBITDA 54,303 50,427 34,296 61,460
53,639 33,483
Restructuring expenses 2,505
1,774 279 -
- -
Adjusted EBITDA
$ 56,808 $ 52,201
$ 34,575 $ 61,460 $ 53,639 $
33,483
Net sales $ 212,101
$ 184,893 $ 107,009 $ 223,258 $ 190,852
$ 120,313
EBITDA margin 25.6 % 27.3
% 32.0 % 27.5 % 28.1 % 27.8 %
Adjusted
EBITDA margin 26.8 % 28.2 %
32.3 % 27.5 % 28.1 % 27.8 %
For the
Nine Months Ended September 30, 2015 2014
FMT HST FSDP FMT
HST FSDP Operating income $
154,665 $ 117,888 $ 91,180 $
166,821 $ 114,580 $ 106,988
Other income (expense)
894 347 1,091 371 24 644
Depreciation and
amortization 20,321 31,874
4,574 20,022
32,404 4,949
EBITDA 175,880
150,109 96,845 187,214 147,008 112,581
Restructuring expenses 2,505
1,774 279 -
- -
Adjusted EBITDA $
178,385 $ 151,883 $
97,124 $ 187,214 $ 147,008 $ 112,581
Net sales $ 645,642 $
552,418 $ 325,572 $ 672,719 $ 562,899 $
393,779
EBITDA margin 27.2 % 27.2
% 29.7 % 27.8 % 26.1 % 28.6 %
Adjusted
EBITDA margin 27.6 % 27.5 %
29.8 % 27.8 % 26.1 % 28.6 %
Conference Call to be Broadcast over
the Internet
IDEX will broadcast its third quarter earnings conference call
over the Internet on Tuesday, October 20, 2015 at 9:30 a.m. CT.
Chairman and Chief Executive Officer Andy Silvernail and Senior
Vice President and Chief Financial Officer Heath Mitts 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 # 13604137.
Forward-Looking
Statements
This news release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Exchange Act of 1934, as amended. These
statements may relate to, among other things, capital expenditures,
cost reductions, cash flow, and operating improvements and are
indicated by words or phrases such as “anticipate,” “estimate,”
“plans,” “expects,” “projects,” “should,” “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 IDEX’s results, particularly
in light of the low levels of order backlogs it typically
maintains; its 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; 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. 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. Investors are cautioned not to rely unduly on
forward-looking statements when evaluating the information
presented here.
About IDEX
IDEX Corporation is an applied solutions company specializing in
fluid and metering technologies, health and science technologies,
and fire, safety and other diversified products built to its
customers’ exacting specifications. Its products are sold in niche
markets to a wide range of industries throughout the world. IDEX
shares are traded on the New York Stock Exchange and Chicago 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 Nine Months Ended September 30,
September 30, 2015 2014
2015 2014 Net sales
$ 503,791 $ 533,179
$ 1,520,870 $
1,623,868
Cost of sales 280,531
298,533
839,954
903,670
Gross profit 223,260
234,646
680,916 720,198
Selling, general and
administrative expenses 114,794 123,799
360,784
383,428
Restructuring expenses 4,723 -
4,723 -
Gain on sale of business (18,070
) -
(18,070
) -
Operating income
121,813 110,847
333,479 336,770
Other (income)
expense - net (693 ) (944 )
(1,589
) (1,651 )
Interest expense
10,229 10,461
31,410 31,323
Income before
income taxes 112,277 101,330
303,658 307,098
Provision for income taxes 32,772
29,889
88,614
89,332
Net income
$ 79,505 $ 71,441
$ 215,044 $ 217,766
Earnings per Common Share: Basic earnings per
common share (a) $ 1.03 $ 0.89
$
2.77 $ 2.70
Diluted earnings per common share
(a) $ 1.02 $ 0.88
$ 2.75 $ 2.68
Share Data: Basic weighted average
common shares outstanding 76,831 79,558
77,431
80,064
Diluted weighted average common shares
outstanding 77,646 80,561
78,266 81,093
Condensed Consolidated Balance Sheets (in
thousands) (unaudited) September 30, December
31, 2015
2014 Assets Current assets
Cash and cash equivalents $ 306,482 $ 509,137
Receivables - net 272,008 256,040
Inventories
252,518 237,631
Other current assets
75,391
72,983
Total current assets 906,399 1,075,791
Property, plant and equipment - net 240,270 219,543
Goodwill and intangible assets 1,701,899 1,592,441
Other noncurrent assets
22,586 20,295
Total
assets $
2,871,154 $ 2,908,070
Liabilities and shareholders' equity Current
liabilities Trade accounts payable $
129,224 $ 127,462
Accrued expenses 169,907
163,409
Short-term borrowings 471 98,946
Dividends
payable 24,584
22,151
Total current liabilities
324,186 411,968
Long-term borrowings 852,780
765,006
Other noncurrent liabilities
265,595 244,645
Total liabilities 1,442,561 1,421,619
Shareholders' equity
1,428,593 1,486,451
Total liabilities and shareholders' equity
$ 2,871,154 $
2,908,070
IDEX CORPORATION Condensed
Consolidated Statements of Cash Flow (in thousands)
(unaudited) Nine Months Ended September 30,
2015 2014 Cash flows
from operating activities Net income $
215,044 $ 217,766
Adjustments to reconcile net income to
net cash provided by operating activities: Gain on sale of
business (18,070 ) -
Depreciation and
amortization 26,634 25,330
Amortization of intangible
assets 31,340 32,952
Amortization of debt issuance
costs 1,233 1,290
Share-based compensation
expense 14,735 16,445
Deferred income taxes
1,277 (5,170 )
Excess tax benefit from share-based
compensation (4,350 ) (5,360 )
Non-cash
interest expense associated with forward starting swaps
5,287 5,432
Changes in (net of the effect from
acquisitions): Receivables (1,689 )
(21,394 )
Inventories (6,474 ) (17,888 )
Other current assets (2,742 ) (2,570 )
Trade accounts payable (4,002 ) 2,188
Accrued expenses 2,340 19,069
Other — net
1,218 (1,507 )
Net
cash flows provided by operating activities 261,781
266,583
Cash flows from investing activities Purchases of
property, plant and equipment (32,611 ) (33,820 )
Disposition of business 27,677 -
Acquisition of
businesses, net of cash acquired (193,165 )
(25,442 )
Other — net 649
(52 )
Net cash flows used in investing activities
(197,450 ) (59,314 )
Cash flows from financing
activities Borrowings under revolving facilities
383,621 105,014
Payments under revolving facilities
(295,934 ) (46,780 )
Payment of 2.58% Senior Euro
Notes (88,420 ) -
Debt issuance costs
(1,698 ) -
Dividends paid (71,673
) (63,525 )
Proceeds from stock option exercises
15,167 13,787
Excess tax benefit from share-based
compensation 4,350 5,360
Purchase of common stock
(177,772 ) (146,042 )
Unvested shares surrendered
for tax withholding (3,217 )
(4,903 )
Net cash flows used in financing activities
(235,576 ) (137,089 )
Effect of exchange rate
changes on cash and cash equivalents
(31,410 ) (22,743 )
Net increase
(decrease) in cash (202,655 ) 47,437
Cash and
cash equivalents at beginning of year
509,137 439,629
Cash and cash
equivalents at end of period $ 306,482
$ 487,066
IDEX CORPORATION Company and Segment Financial
Information (dollars in thousands) (unaudited)
Three Months Ended Nine Months Ended
September 30, (b)
September 30, (b) 2015
2014 2015 2014
Fluid & Metering Technologies Net sales $
212,101 $ 223,258
$ 645,642 $ 672,719
Adjusted operating income (c) 49,415 54,791
157,170 166,821
Adjusted operating margin 23.3
% 24.5 %
24.3 % 24.8 %
Adjusted EBITDA
(d) $ 56,808 $ 61,460
$ 178,385
$ 187,214
Adjusted EBITDA margin 26.8 % 27.5 %
27.6 % 27.8 %
Depreciation and amortization
$ 7,311 $ 6,724
$ 20,321 $ 20,022
Capital expenditures 4,325 3,592
17,849 11,155
Health & Science Technologies (e) Net
sales $ 184,893 $ 190,852
$ 552,418
$ 562,899
Adjusted operating income (c) 40,145
42,214
119,662 114,580
Adjusted operating margin
21.7 % 22.1 %
21.7 % 20.4 %
Adjusted
EBITDA (d) $ 52,201 $ 53,639
$
151,883 $ 147,008
Adjusted EBITDA margin 28.2
% 28.1 %
27.5 % 26.1 %
Depreciation and
amortization $ 11,179 $ 11,005
$
31,874 $ 32,404
Capital expenditures 3,193
5,164
8,755 13,991
Fire & Safety/Diversified
Products Net sales $ 107,009 $ 120,313
$ 325,572 $ 393,779
Adjusted operating income
(c) 32,815 31,355
91,459 106,988
Adjusted
operating margin 30.7 % 26.1 %
28.1
% 27.2 %
Adjusted EBITDA (d) $
34,575 $ 33,483
$ 97,124 $ 112,581
Adjusted
EBITDA margin 32.3 % 27.8 %
29.8 %
28.6 %
Depreciation and amortization $ 1,513 $
1,597
$ 4,574 $ 4,949
Capital expenditures
1,016 1,018
4,128 5,517
Company Net
sales $ 503,791 $ 533,179
$
1,520,870 $ 1,623,868
Adjusted operating income
(c) 108,466 110,847
320,132 336,770
Adjusted operating margin 21.5 % 20.8 %
21.0 % 20.7 %
Adjusted EBITDA (f)
$ 129,536 $ 131,400
$ 379,695 $ 396,703
Adjusted EBITDA margin 25.7 % 24.6 %
25.0 % 24.4 %
Depreciation and amortization
(g) $ 20,377 $ 19,609
$ 57,974 $
58,282
Capital expenditures 8,785 10,521
32,611 33,820
(a) Calculated by applying the two-class method of
allocating earnings to common stock and participating securities as
required by ASC 260, Earnings Per Share. (b) Three
and nine month data includes acquisition of Aegis (April 2014) and
Alfa Valvole (June 2015) in the Fluid & Metering Technologies
segment and Novotema (June 2015) and CiDRA Precision Services (July
2015) in the Health & Science Technologies segment from the
date of acquisition. (c) Segment adjusted operating
income excludes unallocated corporate operating expenses while both
segment and Company adjusted operating income and adjusted EBITDA
exclude restructuring expenses and the gain on sale of a business
in 2015. (d) Segment adjusted EBITDA calculated as
adjusted operating income plus or minus other income (expense) plus
depreciation and amortization. (e) Three and nine
month data for 2015 includes the results of Ismatec through the
date of disposition in July 2015. (f) Consolidated
adjusted EBITDA calculated as net income plus interest expense plus
provision for income taxes plus depreciation and amortization plus
restructuring expenses less the gain on sale of a business.
(g) Depreciation and amortization excludes amortization
of debt issuance costs.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151019006622/en/
IDEX CorporationInvestor Contact:Heath MittsSenior Vice
President and Chief Financial Officer(847) 498-7070
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