IDEX Corporation (NYSE: IEX) today announced its financial
results for the three- and twelve- month periods ended December 31,
2016.
2016 Highlights
- Orders were up 6 percent for the year
and 10 percent in the fourth quarter
- Sales were up 5 percent for the year
and 6 percent in the fourth quarter
- Reported EPS was $3.53 with adjusted
EPS of $3.75, up 6 percent
- Cash from operations of $400 million
led to free cash flow of $362 million, up 12 percent
- Deployed over $500 million on three
acquisitions
- Divested four non-strategic
businesses
Full Year 2016
Orders of $2.1 billion were up 6 percent (flat organic, +7
percent acquisitions/divestitures and -1 percent foreign currency
translation) compared with the prior year.
Sales of $2.1 billion were up 5 percent (-1 percent organic, +7
percent acquisitions/divestitures and -1 percent foreign currency
translation) compared with the prior year.
Gross margin of 44.0 percent was down 80 basis points from the
prior year, primarily due to $14.8 million of pre-tax fair value
inventory step-up charges from the three 2016 acquisitions compared
to $3.7 million from the 2015 acquisitions.
Operating income of $406 million resulted in an operating margin
of 19.2 percent. Adjusted for a $22.3 million loss on the four
divestitures, a $3.6 million pension settlement charge and $3.7
million of restructuring-related charges, adjusted operating income
was $435 million with an adjusted operating margin of 20.6 percent,
down 40 basis points from the prior year adjusted operating margin
primarily due to the fair value inventory step-up charges. Adjusted
operating income drove adjusted EBITDA of $531 million which was 25
percent of sales and covered interest expense by more than 11
times.
The effective tax rate of 26.4 percent was favorably impacted by
a tax benefit generated from the loss on divestitures. The
effective tax rate adjusted to exclude the tax impact from the loss
on divestitures, as well as the tax impact from the pension
settlement and the restructuring charges was 27.6 percent.
Net income was $271 million which resulted in EPS of $3.53.
Adjusted for the net loss on divestitures, the pension settlement
and restructuring charges, adjusted EPS of $3.75 increased 20
cents, or 6 percent, from prior year adjusted EPS.
Fourth Quarter 2016
Orders of $547 million were up 10 percent (+3 percent organic,
+9 percent acquisitions/divestitures and -2 percent foreign
currency translation) compared with the prior year period.
Sales of $530 million were up 6 percent (flat organic, +8
percent acquisitions/divestitures and -2 percent foreign currency
translation) compared with the prior year period.
Gross margin of 43.8 percent was down 90 basis points from the
prior year period, primarily due to the remaining $4.4 million
pre-tax fair value inventory step-up charge from the SFC
acquisition recorded in the fourth quarter.
Operating income of $81 million resulted in an operating margin
of 15.3 percent. Adjusted for a $20.2 million loss on the two
fourth quarter divestitures, a $3.6 million pension settlement
charge and $3.7 million of restructuring-related charges, adjusted
operating income was $109 million with an adjusted operating margin
of 20.5 percent, down 50 basis points from the prior year adjusted
operating margin primarily due to the fair value inventory step-up
charge for the SFC acquisition. Adjusted operating income drove
adjusted EBITDA of $135 million which was 25 percent of sales and
covered interest expense by more than 11 times.
The effective tax rate of 21.2 percent was favorably impacted by
a tax benefit generated from the loss on divestitures. The
effective tax rate adjusted to exclude the tax impact from the loss
on divestitures, as well as the tax impact from the pension
settlement and the restructuring charges was 26.1 percent.
Net income was $57 million which resulted in EPS of 75 cents.
Adjusted for the net loss on divestitures, the pension settlement
and restructuring charges, adjusted EPS of 96 cents increased 2
cents, or 2 percent, from prior year adjusted EPS.
Cash from operations of $116 million was up 17 percent and led
to free cash flow of $106 million which was 143 percent of adjusted
net income.
“We finished 2016 on a strong note with fourth quarter organic
order growth of 3 percent. This organic order growth, coupled with
the organic growth in the third quarter, resulted in our first
consecutive quarterly organic order growth since 2014. We are
beginning to see encouraging indicators within the North American
industrial market, although sustainability is yet to be determined.
Despite the challenging market conditions in 2016, the team
expanded adjusted operating margins, exclusive of the step-up
charges from our recent acquisitions. We also delivered free cash
flow growth of 12 percent to $362 million. Free cash flow of 125
percent of adjusted net income was driven by both operating and
working capital execution and our 2016 acquisitions.
We remain committed to our strategy and supporting capital
deployment plan. We will invest in organic growth, pay consistent
shareholder dividends, opportunistically repurchase our stock and
strategically acquire businesses. With that in mind, we deployed
over $500 million on three strategic acquisitions in 2016. We
remain confident in our ability to pursue acquisitions in the
coming year. In the second half of 2016, we also took the
opportunity to optimize our portfolio and divested four
non-strategic businesses. We will remain disciplined in our capital
deployment strategies and continue to deploy capital to maximize
total shareholder returns.
A solid finish to 2016 and a positive start to 2017 provide an
improved outlook. However, we remain cautious due to the global
economic uncertainty and project 1 to 2 percent organic growth in
2017. We expect to deliver full year 2017 EPS of $3.87 to $3.95,
which includes a 12 cent foreign currency headwind, with first
quarter EPS in the range of 91 to 93 cents.”
Andrew K. SilvernailChairman and Chief
Executive Officer
Fourth Quarter 2016 Segment
Highlights
Fluid & Metering Technologies
- Sales of $207 million reflected a 4
percent decrease compared to the fourth quarter of 2015 (flat
organic, -3 percent divestitures and -1 percent foreign currency
translation).
- Operating income of $53 million
resulted in an operating margin of 25.8 percent. Adjusted for $2.0
million of the pension settlement and $0.9 million of
restructuring-related charges, adjusted operating income was $56
million with an adjusted operating margin of 27.2 percent, a 190
basis point increase compared to prior year adjusted operating
margin primarily due to productivity initiatives partially offset
by lower volume.
- EBITDA of $60 million resulted in an
EBITDA margin of 28.8 percent. Adjusted for $2.0 million of the
pension settlement and $0.9 million of restructuring-related
charges, adjusted EBITDA of $63 million resulted in an adjusted
EBITDA margin of 30.2 percent, a 150 basis point increase compared
to prior year adjusted EBITDA margin.
Health & Science Technologies
- Sales of $188 million reflected a 1
percent increase compared to the fourth quarter of 2015 (-1 percent
organic, +5 percent acquisitions/divestitures and -3 percent
foreign currency translation).
- Operating income of $35 million
resulted in an operating margin of 18.4 percent. Adjusted for $1.1
million of restructuring-related charges, adjusted operating income
was $36 million with an adjusted operating margin of 19.0 percent,
a 330 basis point decrease compared to the prior year adjusted
operating margin primarily due to the $4.4 million pre-tax fair
value inventory step-up charge from the SFC acquisition.
- EBITDA of $47 million resulted in an
EBITDA margin of 25.2 percent. Adjusted for $1.1 million of
restructuring-related charges, adjusted EBITDA of $49 million
resulted in an adjusted EBITDA margin of 25.8 percent, a 230 basis
point decrease compared to prior year adjusted EBITDA margin.
Fire & Safety/Diversified Products
- Sales of $135 million reflected a 37
percent increase compared to the fourth quarter of 2015 (+3 percent
organic, +37 percent acquisition and -3 percent foreign currency
translation).
- Operating income of $30 million
resulted in an operating margin of 22.4 percent. Adjusted for $0.5
million of the pension settlement and $1.4 million of
restructuring-related charges, adjusted operating income was $32
million with an adjusted operating margin of 23.8 percent, a 150
basis point decrease compared to prior year adjusted operating
margin primarily due to the dilutive impact on margins from the
2016 acquisitions.
- EBITDA of $34 million resulted in an
EBITDA margin of 25.2 percent. Adjusted for $0.5 million of the
pension settlement and $1.4 million of restructuring-related
charges, adjusted EBITDA of $36 million resulted in an adjusted
EBITDA margin of 26.7 percent, a 50 basis point decrease compared
to prior year adjusted EBITDA margin.
For the fourth quarter of 2016, Fluid & Metering
Technologies contributed 39 percent of sales, 45 percent of
operating income and 42 percent of EBITDA; Health & Science
Technologies accounted for 35 percent of sales, 29 percent of
operating income and 34 percent of EBITDA; and Fire &
Safety/Diversified Products represented 26 percent of sales, 26
percent of operating income and 24 percent of EBITDA.
2016 Restructuring
Actions
During the fourth quarter of 2016, the Company recorded $3.7
million of restructuring costs as part of initiatives that support
the implementation of key strategic efforts designed to facilitate
long-term, sustainable growth through cost reduction actions,
primarily consisting of employee reductions and facility
rationalization. These initiatives are expected to generate
annual savings in excess of $4 million starting in 2017.
2016 Divestitures
In 2016, the Company divested four businesses that were no
longer aligned with our long-term strategic objectives (Hydra-Stop
– July 2016; CVI Japan – September 2016; IETG – October 2016; and
CVI Korea – December 2016). These four businesses were sold
for cash proceeds of $39.1 million and generated a pre-tax loss of
$22.3 million, which included $14.3 million of currency translation
adjustments (CTA) that were reclassified from equity upon sale of
these businesses. These four businesses generated
approximately $40 million of revenue through their respective dates
of sale in the Company’s 2016 results.
Pension Settlement
IDEX implemented a program to de-risk its pension plans by
offering certain former U.S. employees with a vested pension
benefit an option to take a one-time lump sum distribution rather
than future monthly pension payments. Payments were made from the
retirement plan assets during the fourth quarter of 2016. This
action reduced IDEX’s pension benefit obligations by approximately
$11 million as of December 31, 2016. IDEX recognized a pre-tax
pension settlement charge of $3.6 million in the fourth quarter of
2016.
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
according to U.S. GAAP 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 plus or minus the
loss or gain on sale of businesses plus the pension settlement
charge.
- Adjusted operating margin is calculated
as adjusted operating income divided by net sales.
- Adjusted net income is calculated as
net income plus restructuring expenses plus or minus the loss or
gain on sale of businesses plus the pension settlement charge, 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 plus or minus the loss or gain on sale
of businesses plus the pension settlement charge.
- Free cash flow is calculated as cash
flow from operating activities less capital expenditures.
Table 1: Reconciliations of the Change in Net Sales to Net
Organic Sales
For the Quarter Ended For the Year
Ended December 31, 2016 December 31, 2016
FMT HST FSDP IDEX
FMT HST FSDP IDEX
Change in net sales (4%) 1% 37% 6% (1%)
1% 23% 5%
- Net impact from
acquisitions/divestitures (3%) 5% 37% 8% 1% 3% 27% 7%
-
Impact from FX (1%) (3%) (3%) (2%) (1%) (1%) (1%) (1%)
Change in organic net sales 0% (1%) 3% 0% (1%) (1%) (3%)
(1%)
Table 2: Reconciliations of Reported-to-Adjusted Operating
Income and Margin (dollars in thousands)
For the Quarter Ended December 31, 2016
2015 FMT HST FSDP
Corporate IDEX FMT HST
FSDP Corporate IDEX
Reported operating income (loss) $ 53,376
$ 34,694 $ 30,179
$ (36,838 ) $ 81,411 $
49,841 $ 40,060 $ 24,565 $ (16,207 ) $
98,259
+Restructuring expenses 932 1,117
1,425 200 3,674 4,585 1,634 297 - 6,516
+Loss (gain) on sale of businesses - net - -
- 20,231 20,231 - - - - -
+Pension
settlement 2,032 -
540 982
3,554 - - -
- -
Adjusted operating income
(loss) $ 56,340 $ 35,811
$ 32,144 $ (15,425
) $ 108,870 $ 54,426 $ 41,694
$ 24,862 $ (16,207 ) $ 104,775
Net
sales (eliminations) $ 207,113 $
188,334 $ 135,013 $ (41 )
$ 530,419 $ 215,150 $ 186,578 $ 98,343 $ (273 ) $
499,798
Operating margin 25.8 %
18.4 % 22.4 % n/m 15.3
% 23.2 % 21.5 % 25.0 % n/m 19.7 %
Adjusted operating
margin 27.2 % 19.0 % 23.8
% n/m 20.5 % 25.3 % 22.3 % 25.3 % n/m
21.0 %
For the Year Ended December 31, 2016
2015 FMT HST FSDP
Corporate IDEX FMT HST
FSDP Corporate IDEX
Reported operating income (loss) $ 214,242
$ 153,722 $ 121,888 $
(84,051 ) $ 405,801 $ 204,506 $ 157,948
$ 115,745 $ (46,461 ) $ 431,738
+Restructuring expenses
932 1,117 1,425 200 3,674 7,090
3,408 576 165 11,239
+Loss (gain) on sale of businesses -
net - - - 22,298 22,298 - -
- (18,070 ) (18,070 )
+Pension settlement
2,032 - 540
982 3,554 -
- - - -
Adjusted operating income (loss) $ 217,206
$ 154,839 $ 123,853
$ (60,571 ) $ 435,327
$ 211,596 $ 161,356 $ 116,321 $ (64,366
) $ 424,907
Net sales (eliminations) $
849,101 $ 744,809 $ 520,009
$ (876 ) $ 2,113,043 $ 860,792 $
738,996 $ 423,915 $ (3,035 ) $ 2,020,668
Operating
margin 25.2 % 20.6 % 23.4
% n/m 19.2 % 23.8 % 21.4 % 27.3 %
n/m 21.4 %
Adjusted operating margin 25.6
% 20.8 % 23.8 % n/m
20.6 % 24.6 % 21.8 % 27.4 %
n/m 21.0 %
Table 3: Reconciliations of Reported-to-Adjusted Net Income
and EPS (in thousands, except EPS)
For the Quarter
For the Year
Ended December 31, Ended December 31, 2016
2015 2016 2015 Reported net
income $ 57,347 $ 67,763
$ 271,109
$ 282,807
+Restructuring expenses 3,674 6,516
3,674 11,239
+Tax impact on restructuring expenses
(1,299 ) (1,942 )
(1,299 ) (3,586 )
+Loss (gain) on sale of businesses - net 20,231 -
22,298 (18,070 )
+Tax impact on loss (gain) on sale of
businesses - net (8,239 ) -
(9,706
) 4,839
+Pension settlement 3,554 -
3,554 -
+Tax impact on pension settlement
(1,257 ) -
(1,257
) -
Adjusted net income $
74,011 $ 72,337
$ 288,373
$ 277,229
Reported EPS $ 0.75 $
0.88
$ 3.53 $ 3.62
+Restructuring expenses
0.05 0.08
0.05 0.14
+Tax impact on restructuring
expenses (0.02 ) (0.02 )
(0.02 )
(0.04 )
+Loss (gain) on sale of businesses - net 0.26
-
0.29 (0.23 )
+Tax impact on loss (gain) on sale of
businesses - net (0.11 ) -
(0.13 )
0.06
+Pension settlement 0.05 -
0.05 -
+Tax
impact on pension settlement (0.02 )
-
(0.02 ) -
Adjusted EPS $ 0.96 $ 0.94
$ 3.75 $ 3.55
Diluted
weighted average shares 76,806 77,091
76,758
77,972
Table 4: Reconciliations of EBITDA to Net Income (in
thousands)
For the Quarter Ended December 31, 2016
2015 FMT HST FSDP
Corporate IDEX FMT HST
FSDP Corporate IDEX
Operating income (loss) $ 53,376
$ 34,694 $ 30,179
$ (36,838 ) $ 81,411 $
49,841 $ 40,060 $ 24,565 $ (16,207 ) $
98,259
- Other (income) expense - net 158 (455
) (214 ) (2,834 ) (3,345
) 54 169 (362 ) (515 ) (654 )
+ Depreciation and
amortization 6,447 12,254
3,640 227
22,568 7,341 10,953
1,477 375 20,146
EBITDA 59,665 47,403 34,033
(33,777 ) 107,324 57,128 50,844 26,404 (15,317
) 119,059
- Interest expense 12,009 10,226
-
Provision for income taxes 15,400 20,924
-
Depreciation and amortization 22,568
20,146
Net income $ 57,347
$ 67,763
Net sales (eliminations)
$ 207,113 $ 188,334 $
135,013 $ (41 ) $ 530,419
$ 215,150 $ 186,578 $ 98,343 $ (273 ) $ 499,798
Operating
margin 25.8 % 18.4 % 22.4
% n/m 15.3 % 23.2 % 21.5 % 25.0 % n/m
19.7 %
EBITDA margin 28.8 % 25.2
% 25.2 % n/m 20.2 % 26.6
% 27.3 % 26.8 % n/m 23.8 %
For the Year Ended December
31, 2016 2015 FMT HST
FSDP Corporate IDEX FMT
HST FSDP Corporate
IDEX Operating income (loss) $ 214,242
$ 153,722 $ 121,888 $
(84,051 ) $ 405,801 $ 204,506 $ 157,948
$ 115,745 $ (46,461 ) $ 431,738
- Other (income) expense -
net (192 ) (1,960 ) (1,556
) (4,619 ) (8,327 ) (840 ) (178
) (1,453 ) 228 (2,243 )
+ Depreciation and amortization
28,458 45,298
11,956 1,180
86,892 27,662 42,827
6,051 1,580 78,120
EBITDA 242,892 200,980 135,400
(78,252 ) 501,020 233,008 200,953 123,249
(45,109 ) 512,101
- Interest expense 45,616 41,636
- Provision for income taxes 97,403 109,538
-
Depreciation and amortization 86,892
78,120
Net income $ 271,109
$ 282,807
Net sales (eliminations)
$ 849,101 $ 744,809 $
520,009 $ (876 ) $
2,113,043 $ 860,792 $ 738,996 $ 423,915 $ (3,035 ) $
2,020,668
Operating margin 25.2 %
20.6 % 23.4 % n/m 19.2
% 23.8 % 21.4 % 27.3 % n/m 21.4 %
EBITDA margin
28.6 % 27.0 % 26.0 %
n/m 23.7 % 27.1 % 27.2 % 29.1 % n/m 25.3 %
Table 5: Reconciliations of EBITDA to Adjusted EBITDA
(in thousands)
For the Quarter Ended December 31, 2016
2015 FMT HST FSDP
Corporate IDEX FMT HST
FSDP Corporate IDEX
EBITDA $ 59,665 $ 47,403
$ 34,033 $ (33,777
) $ 107,324 $ 57,128 $ 50,844
$ 26,404 $ (15,317 ) $ 119,059
+Restructuring
expenses 932 1,117 1,425 200
3,674 4,585 1,634 297 - 6,516
+Loss (gain) on sale of
businesses - net - - - 20,231
20,231 - - - - -
+Pension settlement
2,032 - 540
982 3,554 -
- - - -
Adjusted EBITDA $ 62,629 $
48,520 $ 35,998 $
(12,364 ) $ 134,783 $ 61,713
$ 52,478 $ 26,701 $ (15,317 ) $ 125,575
Adjusted EBITDA margin 30.2 %
25.8 % 26.7 % n/m 25.4
% 28.7 % 28.1 % 27.2 % n/m 25.1 %
For the Year
Ended December 31, 2016 2015 FMT
HST FSDP Corporate
IDEX FMT HST FSDP
Corporate IDEX EBITDA $
242,892 $ 200,980 $ 135,400
$ (78,252 ) $ 501,020 $ 233,008
$ 200,953 $ 123,249 $ (45,109 ) $ 512,101
+Restructuring
expenses 932 1,117 1,425 200
3,674 7,090 3,408 576 165 11,239
+Loss (gain) on sale of
businesses - net - - - 22,298
22,298 - - - (18,070 ) (18,070 )
+Pension settlement
2,032 - 540
982 3,554 -
- - - -
Adjusted EBITDA $ 245,856
$ 202,097 $ 137,365
$ (54,772 ) $ 530,546 $
240,098 $ 204,361 $ 123,825 $ (63,014 ) $
505,270
Adjusted EBITDA margin 29.0
% 27.1 % 26.4 % n/m
25.1 % 27.9 % 27.7 % 29.2 % n/m 25.0 %
Table 6: Reconciliations of Free Cash Flow (in
thousands)
For the Quarter Ended For the Year
Ended December 31, Sept 30,
December 31, 2016 2015 2016
2016 2015 Cash flow from operating
activities $ 115,593 $ 98,540 $ 125,480
$
399,917 $ 360,321
- Capital expenditures 9,600
11,165 11,590
38,242 43,776
+ Excess tax benefit from
share-based compensation * - 915 -
- 5,265
Free cash flow $
105,993 $ 88,290 $ 113,890
$ 361,675 $ 321,810
* The Company early adopted ASU 2016-09 effective in the first
quarter of 2016. This ASU issued in March of 2016 simplifies
the accounting for share-based payments, including the
presentation of the excess tax benefit on the statement of cash
flows.
Conference Call to be Broadcast over
the Internet
IDEX will broadcast its fourth quarter earnings conference call
over the Internet on Tuesday, January 31, 2017 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 #13652250.
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 “anticipate,” “estimate,” “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 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.
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 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) Quarter
Ended Year Ended December 31, December 31,
2016 2015
2016 2015 Net sales $
530,419 $ 499,798
$ 2,113,043 $ 2,020,668
Cost of sales 297,934
276,399
1,182,276
1,116,353
Gross profit 232,485 223,399
930,767 904,315
Selling, general and administrative
expenses 127,169 118,624
498,994 479,408
Restructuring expenses 3,674 6,516
3,674
11,239
Loss (gain) on sale of businesses - net
20,231 -
22,298 (18,070 )
Operating
income 81,411 98,259
405,801 431,738
Other
(income) expense - net (3,345 ) (654 )
(8,327 ) (2,243 )
Interest expense
12,009 10,226
45,616 41,636
Income
before income taxes 72,747 88,687
368,512 392,345
Provision for income taxes 15,400
20,924
97,403
109,538
Net income
$ 57,347 $ 67,763
$ 271,109 $ 282,807
Earnings per Common Share (a): Basic
earnings per common share $ 0.75 $ 0.89
$
3.57 $ 3.65
Diluted earnings per common share
$ 0.75 $ 0.88
$ 3.53 $ 3.62
Share Data: Basic weighted average common shares
outstanding 75,955 76,211
75,803 77,126
Diluted weighted average common shares outstanding
76,806 77,091
76,758 77,972
Condensed Consolidated Balance Sheets (in thousands)
(unaudited) December 31, December 31,
2016
2015 Assets Current assets Cash and
cash equivalents $ 235,964 $ 328,018
Receivables - net 272,813 260,000
Inventories
252,859 239,124
Other current assets
61,085
35,542
Total current assets 822,721 862,684
Property, plant and equipment - net 247,816 240,945
Goodwill and intangible assets 2,068,096 1,684,366
Other noncurrent assets
16,311 17,448
Total
assets $
3,154,944 $ 2,805,443
Liabilities and shareholders' equity Current
liabilities Trade accounts payable $
128,933 $ 128,911
Accrued expenses 152,852
153,672
Short-term borrowings 1,046 1,087
Dividends payable
26,327 25,927
Total current
liabilities 309,158 309,597
Long-term borrowings
1,014,235 839,707
Other noncurrent liabilities
287,657
212,848
Total liabilities 1,611,050
1,362,152
Shareholders' equity
1,543,894 1,443,291
Total liabilities and shareholders' equity
$ 3,154,944
$ 2,805,443
IDEX CORPORATION Condensed
Consolidated Statements of Cash Flows (in thousands)
(unaudited) Year Ended December 31,
2016 2015 Cash flows
from operating activities Net income $
271,109 $ 282,807
Adjustments to reconcile net income to
net cash provided by operating activities: Loss (gain) on
sale of businesses - net 22,298 (18,070 )
Asset
impairments 205 795
Gain on sale of fixed assets
(28 ) (114 )
Depreciation and amortization
37,854 35,694
Amortization of intangible assets
49,038 42,426
Amortization of debt issuance costs
1,295 1,612
Share-based compensation expense
20,326 20,048
Deferred income taxes (18,009
) (339 )
Excess tax benefit from share-based
compensation - (5,265 )
Non-cash interest expense
associated with forward starting swaps 6,851 7,030
Pension settlement 3,554 -
Changes in (net of the
effect from acquisitions and divestitures): Receivables
302 8,832
Inventories 32,747 4,557
Other
current assets (22,006 ) (2,728 )
Trade
accounts payable 73 (2,828 )
Accrued expenses
(5,470 ) (16,672 )
Other — net
(222 ) 2,536
Net cash flows
provided by operating activities 399,917 360,321
Cash
flows from investing activities Additions of property, plant
and equipment (38,242 ) (43,776 )
Acquisition
of businesses, net of cash acquired (510,001 )
(195,013 )
Proceeds from sale of businesses, net of cash
sold 39,064 27,677
Proceeds from fixed asset
disposals 49 894
Other — net
(69 ) (273 )
Net cash flows used in
investing activities (509,199 ) (210,491 )
Cash flows from financing activities Borrowings under
revolving facilities 501,529 414,032
Proceeds from
3.20% Senior Notes 100,000 -
Proceeds from 3.37%
Senior Notes 100,000 -
Payments under revolving
facilities (520,125 ) (333,630 )
Payment of
2.58% Senior Euro Notes - (88,420 )
Debt issuance
costs (246 ) (1,739 )
Dividends paid
(102,650 ) (96,172 )
Proceeds from stock option
exercises 30,240 19,217
Excess tax benefit from
share-based compensation - 5,265
Purchase of common
stock (57,272 ) (210,822 )
Unvested shares
surrendered for tax withholding (4,928
) (3,259 )
Net cash flows provided by (used
in) financing activities 46,548 (295,528 )
Effect of
exchange rate changes on cash and cash equivalents
(29,320 ) (35,421 )
Net
decrease in cash (92,054 ) (181,119 )
Cash and
cash equivalents at beginning of year
328,018 509,137
Cash and cash
equivalents at end of period $ 235,964
$ 328,018
IDEX CORPORATION
Company and Segment Financial Information - Reported
(dollars in thousands) (unaudited)
Quarter Ended Year Ended
December 31, (b) December 31, (b)
2016 2015
2016 2015 Fluid
& Metering Technologies Net sales $
207,113 $ 215,150
$ 849,101 $ 860,792
Operating income (c) 53,376 49,841
214,242 204,506
Operating margin 25.8 %
23.2 %
25.2 % 23.8 %
EBITDA $
59,665 $ 57,128
$ 242,892 $ 233,008
EBITDA
margin 28.8 % 26.6 %
28.6 % 27.1 %
Depreciation and amortization $ 6,447 $ 7,341
$ 28,458 $ 27,662
Capital expenditures
3,685 4,997
16,389 22,846
Health &
Science Technologies Net sales $ 188,334 $
186,578
$ 744,809 $ 738,996
Operating income
(c) 34,694 40,060
153,722 157,948
Operating
margin 18.4 % 21.5 %
20.6 % 21.4 %
EBITDA $ 47,403 $ 50,844
$
200,980 $ 200,953
EBITDA margin 25.2 %
27.3 %
27.0 % 27.2 %
Depreciation and
amortization $ 12,254 $ 10,953
$
45,298 $ 42,827
Capital expenditures 4,210
4,349
15,665 13,104
Fire & Safety/Diversified
Products Net sales $ 135,013 $ 98,343
$ 520,009 $ 423,915
Operating income
(c) 30,179 24,565
121,888 115,745
Operating
margin 22.4 % 25.0 %
23.4 % 27.3 %
EBITDA $ 34,033 $ 26,404
$
135,400 $ 123,249
EBITDA margin 25.2 %
26.8 %
26.0 % 29.1 %
Depreciation and
amortization $ 3,640 $ 1,477
$
11,956 $ 6,051
Capital expenditures 1,640
1,676
5,945 5,804
Corporate Office and
Eliminations Intersegment sales eliminations $
(41 ) $ (273 )
$ (876 ) $ (3,035
)
Operating loss (c) (36,838 ) (16,207
)
(84,051 ) (46,461 )
EBITDA (33,777
) (15,317 )
(78,252 ) (45,109 )
Depreciation and amortization 227 375
1,180
1,580
Capital expenditures 65 143
243 2,022
Company Net sales $ 530,419 $
499,798
$ 2,113,043 $ 2,020,668
Operating
income 81,411 98,259
405,801 431,738
Operating
margin 15.3 % 19.7 %
19.2 % 21.4 %
EBITDA $ 107,324 $ 119,059
$
501,020 $ 512,101
EBITDA margin 20.2 %
23.8 %
23.7 % 25.3 %
Depreciation and
amortization (d) $ 22,568 $ 20,146
$ 86,892 $ 78,120
Capital expenditures
9,600 11,165
38,242 43,776
(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 twelve month data includes acquisition of Alfa Valvole
(June 2015) in the Fluid & Metering Technologies segment,
Novotema (June 2015), CiDRA Precision Services (July 2015) and SFC
Koenig (September 2016) in the Health & Science Technologies
segment and Akron Brass (March 2016) and AWG Fittings (July 2016)
in the Fire & Safety/Diversified segment from the date of
acquisition. Three and twelve month data also includes the results
of Hydra-Stop (July 2016) and IETG (October 2016) in the Fluid
& Metering Technologies segment and Ismatec (July 2015), CVI
Japan (September 2016) and CVI Korea (December 2016) in the Health
& Science Technologies segment through the date of
disposition. (c) Segment operating income
excludes unallocated corporate operating expenses which are
included in Corporate Office and Eliminations.
(d) Depreciation and amortization excludes amortization
of debt issuance costs.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170130006196/en/
IDEX CorporationInvestor Contact:William K. GroganSenior
Vice President and Chief Financial Officer(847) 498-7070
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