UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report: July 22, 2013

(Date of earliest event reported)

 

 

IDEX CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		1-10235		36-3555336
(State of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

1925 W. Field Court

Lake Forest, Illinois 60045

(Address of principal executive offices, including zip code)

(847) 498-7070

(Registrant’s telephone number, including area code)

 

 

Check the appropriate box if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 2.02 – Results of Operations and Financial Condition.

On July 22, 2013, IDEX Corporation (the “Company”) issued a press release announcing financial results for the period ended June 30, 2013.

A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

The information in this Current Report furnished pursuant to Item 2.02 shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. This information shall not be incorporated by reference into any registration statement pursuant to the Securities Act of 1933, as amended.

Item 9.01 – Financial Statements and Exhibits.

 

(d)

Exhibits

 

99.1		Press release dated July 22, 2013 announcing IDEX Corporation’s quarterly operating results

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

July 23, 2013

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Exhibit Index

 

Exhibit Number		Description
99.1		Press release dated July 22, 2013 announcing IDEX Corporation’s quarterly operating results

EXHIBIT 99.1

IDEX REPORTS RECORD SECOND QUARTER RESULTS - EPS OF 76 CENTS AND FREE CASH FLOW OF $103 MILLION

LAKE FOREST, IL, JULY 22 – IDEX Corporation (NYSE: IEX) today announced its financial results for the three month period ended June 30, 2013.

Orders in the quarter totaled $506 million, up 9 percent from the prior year period. Sales in the quarter totaled $518 million, 5 percent higher than the prior year period. For the quarter, on an organic basis, orders were 6 percent higher and sales were 2 percent higher than the prior year period.

Second quarter 2013 operating income was $100 million. This resulted in an operating margin of 19.2 percent, up 70 basis points from the prior year adjusted operating margin, primarily due to productivity and benefits from our structural cost actions taken in the prior year.

Second quarter earnings per share were 76 cents, an increase of 9 cents, or 13 percent, from the adjusted prior year.

Free cash flow was $103 million for the quarter, a 46 percent increase from prior year second quarter due to higher earnings and improved operating working capital.

Second Quarter Highlights

 

•

Orders of $506 million increased 9 percent compared to the prior year (+6 percent organic and +3 percent acquisition).

 

•

Sales of $518 million increased 5 percent compared to the prior year (+2 percent organic and +3 percent acquisition).

 

•

Gross margin of 43.0 percent was up 190 basis points from the prior year.

 

•

Operating margin of 19.2 percent was up 70 basis points from the adjusted prior year.

 

•

Net income of $63 million represents an increase of 11 percent compared to the prior year adjusted net income of $56 million.

 

•

EPS of 76 cents was 9 cents, or 13 percent, higher than the prior year adjusted EPS of 67 cents.

 

•

EBITDA of $119 million, which represents an 11 percent increase from the prior year, was 23 percent of sales and covered interest expense by 11 times.

 

•

Free cash flow of $103 million, which represents a 46 percent increase from the prior year, was over 165 percent of net income.

 

•

The Company completed the repurchase of 956 thousand shares of common stock for $51 million in the second quarter of 2013. Year-to-date, the Company has repurchased over 1.6 million shares of common stock for $85 million.

 

 

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Second Quarter 2013 Business Highlights (Operating margin excludes restructuring charges in 2012)

Fluid & Metering Technologies

 

•

Sales in the second quarter of $225 million reflected a 7 percent increase compared to the second quarter of 2012 (all organic).

 

•

Operating margin of 24.9 percent represented a 280 basis point improvement compared with the second quarter of 2012 primarily due to higher volume and productivity initiatives.

Health & Science Technologies

 

•

Sales in the second quarter of $181 million reflected a 6 percent increase compared to the second quarter of 2012 (-2 percent organic, +9 percent acquisitions and -1 percent foreign currency translation).

 

•

Operating margin of 19.1 percent represented a 250 basis point increase compared with the second quarter of 2012 primarily due to productivity and cost reduction initiatives.

Fire & Safety/Diversified Products

 

•

Sales in the second quarter of $114 million reflected a 1 percent decrease compared to the second quarter of 2012 (all organic).

 

•

Operating margin of 20.7 percent represented a 270 basis point decrease compared with the second quarter of 2012 primarily due to unfavorable product mix across the segment and a charge associated with a facility disposal.

For the second quarter of 2013, Fluid & Metering Technologies contributed 43 percent of sales and 49 percent of operating income; Health & Science Technologies accounted for 35 percent of sales and 30 percent of operating income; and Fire & Safety/Diversified Products represented 22 percent of sales and 21 percent of operating income.

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 (dollars in millions)

 

		For the Quarter Ended
		June 30,												March 31,
		2013				2012				Change				2013				Change
Income before Taxes		$	88.4			$	77.9				13	%		$	85.4				4	%
Depreciation and Amortization			20.1				19.2				5	%			19.8				2	%
Interest			10.6				10.5				1	%			10.6				—
EBITDA			119.1				107.6				11	%			115.8				3	%
Restructuring Charge			—				2.6				(100	%)			—				—
Adjusted EBITDA		$	119.1			$	110.2				8	%		$	115.8				3	%
Cash Flow from Operating Activities		$	109.3			$	80.7				35	%		$	72.2				51	%
Capital Expenditures			(8.2	)			(10.2	)			(20	%)			(7.6	)			8	%
Excess Tax Benefit from Stock-Based Compensation			2.3				0.3				n/m				2.4				(4	%)
Free Cash Flow		$	103.4			$	70.8				46	%		$	67.0				54	%

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Conference Call to be Broadcast over the Internet

IDEX will broadcast its second quarter earnings conference call over the Internet on Tuesday, July 23, 2013 at 9:30 a.m. CT. Chairman and Chief Executive Officer Andy Silvernail and 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 855.859.2056 (or 404.537.3406 for international participants) using the ID # 26074056.

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.

(Tables follow)

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IDEX CORPORATION

Condensed Statements of Consolidated Operations

(in thousands except per share amounts)

(unaudited)

 

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2013				2012				2013				2012
Net sales		$	518,445			$	494,144			$	1,012,893			$	983,561
Cost of sales			295,596				291,031				578,047				577,559
Gross profit			222,849				203,113				434,846				406,002
Selling, general and administrative expenses			123,290				111,882				240,575				225,264
Restructuring expenses			—				2,581				—				7,519
Operating income			99,559				88,650				194,271				173,219
Other (income) expense - net			573				230				(706	)			113
Interest expense			10,597				10,536				21,154				21,198
Income before income taxes			88,389				77,884				173,823				151,908
Provision for income taxes			25,828				23,533				49,962				45,386
Net income		$	62,561			$	54,351			$	123,861			$	106,522
Earnings per Common Share:
Basic earnings per common share (a)		$	0.76			$	0.65			$	1.50			$	1.28
Diluted earnings per common share (a)		$	0.76			$	0.65			$	1.49			$	1.27
Share Data:
Basic weighted average common shares outstanding			81,829				83,180				82,013				82,987
Diluted weighted average common shares outstanding			82,734				84,090				82,943				83,991

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

		June 30, 2013				December 31, 2012
Assets
Current assets
Cash and cash equivalents		$	374,489			$	318,864
Receivables - net			268,035				256,095
Inventories			231,504				234,950
Other current assets			62,072				71,956
Total current assets			936,100				881,865
Property, plant and equipment - net			213,384				219,161
Goodwill and intangible assets			1,658,827				1,663,099
Other noncurrent assets			19,341				21,265
Total assets		$	2,827,652			$	2,785,390
Liabilities and shareholders’ equity
Current liabilities
Trade accounts payable		$	127,292			$	117,341
Accrued expenses			143,994				150,176
Short-term borrowings			4,451				7,335
Dividends payable			18,946				16,575
Total current liabilities			294,683				291,427
Long-term borrowings			811,007				779,241
Other noncurrent liabilities			243,624				249,724
Total liabilities			1,349,314				1,320,392
Shareholders’ equity			1,478,338				1,464,998
Total liabilities and shareholders’ equity		$	2,827,652			$	2,785,390

-more-

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IDEX CORPORATION

Company and Business Group Financial Information

(dollars in thousands)

(unaudited)

 

		Three Months Ended								Six Months Ended
		June 30, (b)								June 30, (b)
		2013				2012 (c)				2013				2012
Fluid & Metering Technologies
Net sales		$	225,488			$	210,715			$	437,243			$	423,433
Operating income (c)			56,115				46,622				104,194				93,807
Operating margin			24.9	%			22.1	%			23.8	%			22.2	%
Depreciation and amortization		$	7,012			$	7,408			$	13,972			$	14,948
Capital expenditures			2,507				4,521				5,283				7,050
Health & Science Technologies
Net sales		$	180,867			$	170,563			$	353,735			$	344,349
Operating income (c)			34,522				28,289				66,789				60,014
Operating margin			19.1	%			16.6	%			18.9	%			17.4	%
Depreciation and amortization		$	10,947			$	9,559			$	21,739			$	19,020
Capital expenditures			4,168				2,979				6,954				5,813
Fire & Safety/Diversified Products (c)
Net sales		$	114,236			$	115,924			$	225,749			$	219,974
Operating income (c)			23,676				27,126				51,908				51,358
Operating margin			20.7	%			23.4	%			23.0	%			23.3	%
Depreciation and amortization		$	1,741			$	1,824			$	3,449			$	3,603
Capital expenditures			741				2,012				2,221				3,953
Company
Net sales		$	518,445			$	494,144			$	1,012,893			$	983,561
Operating income (c)			99,559				91,231				194,271				180,738
Operating margin			19.2	%			18.5	%			19.2	%			18.4	%
Depreciation and amortization (d)		$	20,077			$	19,203			$	39,916			$	38,393
Capital expenditures			8,197				9,631				15,822				18,058

 

(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 six month data includes acquisitions of FTL (March 2013), Matcon (July 2012) and ERC (April 2012) in the Health & Science Technologies segment from the date of acquisition.

(c)	Group operating income excludes unallocated corporate operating expenses while both Group and Company operating income excludes restructuring related charges for 2012.

(d)	Depreciation and amortization excludes amortization of debt issuance expenses.