IDEX Reports Record Third Quarter Results - EPS of 78 Cents and Free Cash Flow of $113 Million
Orders in the quarter of
Third quarter 2013 operating income was
Third quarter net income was
Free cash flow was
Third Quarter Highlights
$532 millionincreased 14 percent compared to the prior year (+13 percent organic and +1 percent acquisition).
$491 millionincreased 2 percent compared to the prior year (+1 percent organic and +1 percent acquisition).
- Gross margin of 43.1 percent was up 250 basis points from the prior year.
- Operating margin of 19.8 percent was up 150 basis points from the adjusted prior year.
Net income of
$64 millionrepresents an increase of 16 percent compared to the prior year adjusted net income of $55 million.
78 centswas 12 cents, or 18 percent, higher than the prior year adjusted EPS of 66 cents.
$117 million, which represents a 17 percent increase from the prior year, was 24 percent of sales and covered interest expense by 11 times.
Free cash flow of
$113 million, which represents a 23 percent increase from the prior year, was over 175 percent of net income.
In the third quarter, the Company completed the repurchase of 881
thousand shares of common stock for
$53 million. Year-to-date, the Company has repurchased over 2.5 million shares of common stock for $138 million.
“Order growth of 14 percent built a healthy backlog and positions us
well for the balance of the year and start of 2014. Five points of the
order growth was from a large dispensing equipment order which is
scheduled to ship primarily during the first half of 2014. Free cash
flow in the third quarter of
Earlier this year I outlined a goal of driving productivity to deliver
strong margins, earnings, and cash flows, while providing resources to
invest in organic growth. I am pleased with our progress. In the third
quarter, despite continued volatility across the global markets, our
strong execution resulted in solid margin expansion and cash flow
generation. Our ability to convert cash fuels our capital deployment
strategy. We have continued our disciplined approach, focusing on a
combination of funding organic growth, strategic acquisitions,
shareholder dividends and share repurchases. Throughout the year we have
invested significantly in commercial and new product initiatives. We
have also returned
For the foreseeable future, we expect the global end markets to remain
uneven. However, our ability to execute in this environment should
generate organic revenue growth of approximately 5 percent in the fourth
quarter. We are projecting fourth quarter 2013 EPS to be in the range of
Chairman and Chief Executive Officer
Third Quarter 2013 Business Highlights (Operating margin excludes restructuring charges in 2012)
Fluid & Metering Technologies
Sales in the third quarter of
$212 millionreflected a 7 percent increase compared to the third quarter of 2012 (+6 percent organic and +1 percent foreign currency translation).
- Operating margin of 24.4 percent represented a 300 basis point improvement compared with the third quarter of 2012 primarily due to higher volume and productivity initiatives.
Health & Science Technologies
Sales in the third quarter of
$179 millionreflected a 1 percent increase compared to the third quarter of 2012 (-2 percent organic, +4 percent acquisitions and -1 percent foreign currency translation).
- Operating margin of 20.6 percent represented a 330 basis point increase compared with the third quarter of 2012 primarily due to productivity and cost reduction initiatives.
Fire & Safety/Diversified Products
Sales in the third quarter of
$101 millionreflected a 6 percent decrease compared to the third quarter of 2012 (-7 percent organic and +1 percent foreign currency translation).
- Operating margin of 21.9 percent represented a 290 basis point decrease compared with the third quarter of 2012 primarily due to lower volume and unfavorable product mix across the segment.
For the third quarter of 2013, Fluid & Metering Technologies contributed 43 percent of sales and 47 percent of operating income; Health & Science Technologies accounted for 36 percent of sales and 33 percent of operating income; and Fire & Safety/Diversified Products represented 21 percent of sales and 20 percent of operating income.
EBITDA and Free Cash Flow
EBITDA means earnings before interest, income taxes, depreciation and amortization, while free cash flow means cash flow from operating activities less capital expenditures plus the excess tax benefit from stock-based compensation. Management uses these non-GAAP financial measures as internal operating metrics and for enterprise valuation purposes. Management believes these measures are useful as analytical indicators of leverage capacity and debt servicing ability, and uses them to measure financial performance as well as for planning purposes. However, they should not be considered as alternatives to net income, cash flow from operating activities or any other items calculated in accordance with U.S. GAAP, or as an indicator of operating performance. The definitions of EBITDA and free cash flow used here may differ from those used by other companies.
|For the Quarter Ended|
|September 30,||June 30,|
|Income before Taxes||$||86.6||$||70.2||23||%||$||88.4||(2||%)|
|Depreciation and Amortization||19.8||19.5||2||%||20.1||(1||%)|
|Cash Flow from Operating Activities||$||118.4||$||101.0||17||%||$||109.3||8||%|
|Excess Tax Benefit from Stock-Based Compensation||2.1||0.8||n/m||2.3||(9||%)|
|Free Cash Flow||$||113.2||$||92.4||23||%||$||103.4||9||%|
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||279,108||285,019||857,155||862,578|
|Selling, general and administrative expenses||114,140||107,167||354,715||332,431|
|Other (income) expense - net||188||(132||)||(518||)||(19||)|
|Income before income taxes||86,611||70,184||260,434||222,092|
|Provision for income taxes||22,812||20,057||72,774||65,443|
|Earnings per Common Share:|
|Basic earnings per common share (a)||$||0.78||$||0.60||$||2.28||$||1.88|
|Diluted earnings per common share (a)||$||0.78||$||0.60||$||2.27||$||1.87|
|Basic weighted average common shares outstanding||81,259||82,482||81,762||82,820|
|Diluted weighted average common shares outstanding||82,218||83,370||82,701||83,785|
|Condensed Consolidated Balance Sheets|
|September 30,||December 31,|
|Cash and cash equivalents||$||399,805||$||318,864|
|Receivables - net||255,977||256,095|
|Other current assets||58,216||71,956|
|Total current assets||950,769||881,865|
|Property, plant and equipment - net||214,253||219,161|
|Goodwill and intangible assets||1,665,576||1,663,099|
|Other noncurrent assets||18,783||21,265|
|Liabilities and shareholders' equity|
|Trade accounts payable||$||130,683||$||117,341|
|Total current liabilities||309,042||291,427|
|Other noncurrent liabilities||245,772||249,724|
|Total liabilities and shareholders' equity||$||2,849,381||$||2,785,390|
|Company and Business Group Financial Information|
|(dollars in thousands)|
|Three Months Ended||Nine Months Ended|
|September 30, (b)||September 30, (b)|
|Fluid & Metering Technologies|
|Operating income (c)||51,736||42,368||155,930||136,175|
|Depreciation and amortization||$||6,981||$||7,246||$||20,953||$||22,194|
|Health & Science Technologies|
|Operating income (c)||36,775||30,480||103,564||90,494|
|Depreciation and amortization||$||10,798||$||10,273||$||32,537||$||29,293|
|Fire & Safety/Diversified Products|
|Operating income (c)||22,119||26,807||74,027||78,165|
|Depreciation and amortization||$||1,726||$||1,622||$||5,175||$||5,225|
|Operating income (c)||97,369||87,673||291,640||268,411|
|Depreciation and amortization (d)||$||19,779||$||19,545||$||59,695||$||57,938|
|(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 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.|
Vice President – Chief Financial Officer