IDEX Reports Third Quarter Adjusted EPS of 66 Cents, Record Free Cash Flow and an Additional $200 Million Share Repurchase Authorization
New orders in the quarter totaled
Third quarter 2012 operating income, adjusted for
Excluding the impact of restructuring related charges in both years and
the acquisition fair value inventory charge in the prior year, third
quarter adjusted earnings per share were
Free cash flow was
Additionally, the Company’s Board of Directors has increased the
authorized level for repurchases of common stock by
Third Quarter Highlights
- Orders decreased 3 percent compared to the prior year (-4 percent organic, +3 percent acquisition and -2 percent foreign currency translation).
- Sales increased 1 percent compared to the prior year (+1 percent organic, +2 percent acquisition and -2 percent foreign currency translation).
Reported net income of
$50 millionwas $2 million, or 4 percent, higher than the prior year. Excluding restructuring related charges, adjusted net income was $55 millionor 7 percent lower than prior year adjusted net income.
Reported EPS of
60 centswas 2 cents, or 3 percent, higher than the prior year EPS. Adjusted EPS of 66 centswas 5 cents, or 7 percent, lower than the prior year adjusted EPS.
$100 millionwas 21 percent of sales and covered interest expense by nearly 10 times.
Free cash flow was
$92 million, representing a record and over 180 percent of net income. Year-to-date free cash flow continues to be strong – up 41 percent from the prior year.
- During the quarter, the Company completed another strategic acquisition, Matcon, a global leader in material processing solutions in the Pharmaceuticals, Food, Plastics and Fine Chemicals industries.
The Company completed the repurchase of 1 million shares of common
$39 millionin the third quarter. Over two percent of the outstanding shares of common stock, or 1.9 million shares, have been purchased by the Company in 2012.
“We achieved solid profit performance and excellent cash generation in
the third quarter in a difficult global environment. Third quarter
adjusted EPS of
Our strong balance sheet and cash generation provide us ample
opportunity to deploy capital and remain focused on delivering robust
and consistent shareholder returns. In addition to our longstanding
investment priorities of organic growth and strategic acquisitions, our
Board of Directors has increased the authorization level for the
repurchase of our shares by
We expect market conditions to remain challenging, specifically outside
the US, resulting in expected fourth quarter flat organic revenue.
Despite this market volatility, our disciplined execution allows us to
maintain our prior full year 2012 adjusted EPS guidance of
Chairman and Chief Executive Officer
Third Quarter 2012 Business Highlights (Operating margin excludes restructuring related and non-cash fair value inventory charges)
Fluid & Metering Technologies
Sales in the third quarter of
$198 millionreflected a 4 percent decrease compared to the third quarter of 2011 (-1 percent organic and -3 percent foreign currency translation).
- Operating margin of 21.4 percent represented a 130 basis point improvement compared with the third quarter of 2011 primarily due to productivity and cost reduction initiatives.
Health & Science Technologies
Sales in the third quarter of
$176 millionreflected a 2 percent increase compared to the third quarter of 2011 (-4 percent organic, +7 percent acquisitions and -1 percent foreign currency translation).
- Operating margin of 17.3 percent represented a 150 basis point decrease compared with the third quarter 2011 primarily due to lower margins from recently acquired businesses.
Fire & Safety/Diversified Products
Sales in the third quarter of
$108 millionreflected a 10 percent increase compared to the third quarter of 2011 (+13 percent organic and -3 percent foreign currency translation).
- Operating margin of 24.8 percent represented a 360 basis point increase compared with the third quarter of 2011 primarily due to improved productivity and cost reduction initiatives.
For the third quarter of 2012, Fluid & Metering Technologies contributed 41 percent of sales and 42 percent of operating income; Health & Science Technologies accounted for 37 percent of sales and 31 percent of operating income; and Fire & Safety/Diversified Products represented 22 percent of sales and 27 percent of operating income.
Share Repurchase Authorization
The Company’s Board of Directors authorized the repurchase of an
EBITDA and Free Cash Flow
EBITDA means earnings before interest, income taxes, depreciation and amortization, while free cash flow means cash flow from operating activities less capital expenditures plus the excess tax benefit from stock-based compensation. Management uses these non-GAAP financial measures as internal operating metrics and for enterprise valuation purposes. Management believes these measures are useful as analytical indicators of leverage capacity and debt servicing ability, and uses them to measure financial performance as well as for planning purposes. However, they should not be considered as alternatives to net income, cash flow from operating activities or any other items calculated in accordance with U.S. GAAP, or as an indicator of operating performance. The definitions of EBITDA and free cash flow used here may differ from those used by other companies.
|EBITDA and Free Cash Flow Bridge||For the Quarter Ended|
|September 30,||June 30,|
Income before taxes
Depreciation and amortization
CVI fair value inventory charge
Cash Flow from operating activities
Excess tax benefit from stock-based compensation
Free cash flow
Conference Call to be Broadcast over the Internet
IDEX will broadcast its third quarter earnings conference call over the
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.
|Condensed Statements of Consolidated Operations|
|(in thousands except per share amounts)|
|Three Months Ended||Nine Months Ended|
|September 30,||September 30,|
|Cost of sales||285,019||295,349||862,578||812,697|
|Selling, general and administrative expenses||107,167||107,296||332,431||313,485|
|Other expense (income) - net||(132||)||441||(19||)||1,001|
|Income before income taxes||70,184||63,101||222,092||206,717|
|Provision for income taxes||20,057||14,765||65,443||60,248|
|Earnings per Common Share:|
|Basic earnings per common share (a)||$||0.60||$||0.58||$||1.88||$||1.77|
|Diluted earnings per common share (a)||$||0.60||$||0.58||$||1.87||$||1.75|
|Basic weighted average common shares outstanding||82,482||82,402||82,820||81,994|
|Diluted weighted average common shares outstanding||83,370||83,586||83,785||83,533|
|Condensed Consolidated Balance Sheets|
|September 30,||December 31,|
|Cash and cash equivalents||$||260,503||$||230,259|
|Receivables - net||277,505||252,845|
|Other current assets||56,292||51,799|
|Total current assets||843,864||789,161|
|Property, plant and equipment - net||223,762||213,717|
|Goodwill and intangible assets||1,869,481||1,813,588|
|Other noncurrent assets||20,328||19,641|
|Liabilities and shareholders' equity|
|Trade accounts payable||$||117,793||$||110,977|
|Total current liabilities||294,042||258,278|
|Other noncurrent liabilities||271,788||258,328|
|Total liabilities and shareholders' equity||$||2,957,435||$||2,836,107|
|Company and Business Group Financial Information|
|(dollars in thousands)|
|Three Months Ended||Nine Months Ended|
|September 30, (b)||September 30, (b)|
|2012||2011 (c)||2012||2011 (c)|
|Fluid & Metering Technologies|
|Net sales||$ 198,000||$ 205,797||$ 621,433||$ 614,367|
|Operating income (d)||42,368||41,462||136,175||124,800|
|Depreciation and amortization||$ 7,246||$ 8,603||$ 22,194||$ 24,841|
|Health & Science Technologies|
|Net sales||$ 176,225||$ 172,911||$ 520,574||$ 442,619|
|Operating income (d) (e)||30,480||32,515||90,494||91,881|
|Depreciation and amortization||$ 10,273||$ 9,712||$ 29,293||$ 20,686|
|Fire & Safety/Diversified Products (c)|
|Net sales||$ 108,199||$ 98,735||$ 328,173||$ 302,814|
|Operating income (d)||26,807||20,965||78,165||68,972|
|Depreciation and amortization||$ 1,622||$ 1,844||$ 5,225||$ 6,561|
|Net sales||$ 479,859||$ 476,881||$ 1,463,420||$ 1,357,768|
|Operating income (d)||87,673||87,036||268,411||247,386|
|Depreciation and amortization (f)||$ 19,545||$ 20,540||$ 57,938||$ 53,116|
|(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 acquisitions of Matcon (July 2012), ERC (April 2012), CVI Melles Griot (June 2011), Microfluidics (March 2011) and Advanced Thin Films (January 2011) in the Health & Science Technologies segment from the date of acquisition.|
|(c)||Financial data for 2011 has been revised to reflect the transfer of our Trebor business unit from the Health & Science Technologies segment to the Fluid & Metering Technologies segment as well as the movement of the Dispensing Equipment segment into the Fire & Safety/Diversified Products segment.|
|(d)||Group operating income excludes unallocated corporate operating expenses while both Group and Company operating income excludes restructuring related charges.|
|(e)||Operating income excludes $12.8 million and $15.8 million for the three and nine months ending September 30, 2011, respectively, related to a non-cash acquisition fair value inventory charge.|
|(f)||Depreciation and amortization excludes amortization of debt issuance expenses.|
Vice President – Chief Financial Officer