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: October 21, 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 October 21, 2013, IDEX Corporation (the “Company”) issued a press release announcing financial results for the period ended September 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 October 21, 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.

 

October 22, 2013

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Exhibit Index

 

Exhibit Number		Description
99.1		Press release dated October 21, 2013 announcing IDEX Corporation’s quarterly operating results

EXHIBIT 99.1

IDEX REPORTS RECORD THIRD QUARTER RESULTS - EPS OF 78 CENTS AND FREE CASH FLOW OF $113 MILLION

LAKE FOREST, IL, OCTOBER 21 – IDEX Corporation (NYSE: IEX) today announced its financial results for the three month period ended September 30, 2013.

Orders in the quarter of $532 million were up 14 percent from the prior year period. Sales in the quarter totaled $491 million, 2 percent higher than the prior year period. For the quarter, on an organic basis, orders were 13 percent higher and sales were 1 percent higher than the prior year period. Orders benefitted from a large dispensing equipment order received in the quarter.

Third quarter 2013 operating income was $97 million. This resulted in an operating margin of 19.8 percent, up 150 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.

Third quarter net income was $64 million, an increase of 16 percent from the adjusted prior year. Third quarter earnings per share were 78 cents, an increase of 12 cents, or 18 percent, from the adjusted prior year. Third quarter net income and earnings per share include $2.1 million of tax benefits realized in the quarter.

Free cash flow was $113 million for the quarter, a 23 percent increase from prior year third quarter due to higher earnings and improved operating working capital.

Third Quarter Highlights

 

•

Orders of $532 million increased 14 percent compared to the prior year (+13 percent organic and +1 percent acquisition).

 

•

Sales of $491 million increased 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 million represents an increase of 16 percent compared to the prior year adjusted net income of $55 million.

 

•

EPS of 78 cents was 12 cents, or 18 percent, higher than the prior year adjusted EPS of 66 cents.

 

•

EBITDA of $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.

 

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

Fluid & Metering Technologies

 

•

Sales in the third quarter of $212 million reflected 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 million reflected 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 million reflected 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.

EBITDA and Free Cash Flow Bridge (dollars in millions)

 

		For the Quarter Ended
		September 30,												June 30,
		2013				2012				Change				2013				Change
Income before Taxes		$	86.6			$	70.2				23	%		$	88.4				(2	%)
Depreciation and Amortization			19.8				19.5				2	%			20.1				(1	%)
Interest Expense			10.6				10.5				1	%			10.6				—
EBITDA			117.0				100.2				17	%			119.1				(2	%)
Restructuring Charge			—				7.1				(100	%)			—				—
Adjusted EBITDA		$	117.0			$	107.3				9	%		$	119.1				(2	%)
Cash Flow from Operating Activities		$	118.4			$	101.0				17	%		$	109.3				8	%
Capital Expenditures			(7.3	)			(9.4	)			(22	%)			(8.2	)			(11	%)
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	%

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Conference Call to be Broadcast over the Internet

IDEX will broadcast its third quarter earnings conference call over the Internet on Tuesday, October 22, 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 # 26074681.

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 September 30,								Nine Months Ended September 30,
		2013				2012				2013				2012
Net sales		$	490,617			$	479,859			$	1,503,510			$	1,463,420
Cost of sales			279,108				285,019				857,155				862,578
Gross profit			211,509				194,840				646,355				600,842
Selling, general and administrative expenses			114,140				107,167				354,715				332,431
Restructuring expenses			—				7,085				—				14,604
Operating income			97,369				80,588				291,640				253,807
Other (income) expense - net			188				(132	)			(518	)			(19	)
Interest expense			10,570				10,536				31,724				31,734
Income before income taxes			86,611				70,184				260,434				222,092
Provision for income taxes			22,812				20,057				72,774				65,443
Net income		$	63,799			$	50,127			$	187,660			$	156,649
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
Share Data:
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

(in thousands)

(unaudited)

 

		September 30,				December 31,
		2013				2012
Assets
Current assets
Cash and cash equivalents		$	399,805			$	318,864
Receivables - net			255,977				256,095
Inventories			236,771				234,950
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
Total assets		$	2,849,381			$	2,785,390
Liabilities and shareholders’ equity
Current liabilities
Trade accounts payable		$	130,683			$	117,341
Accrued expenses			155,235				150,176
Short-term borrowings			4,379				7,335
Dividends payable			18,745				16,575
Total current liabilities			309,042				291,427
Long-term borrowings			780,043				779,241
Other noncurrent liabilities			245,772				249,724
Total liabilities			1,334,857				1,320,392
Shareholders’ equity			1,514,524				1,464,998
Total liabilities and shareholders’ equity		$	2,849,381			$	2,785,390

 

-more-

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IDEX CORPORATION

Company and Business Group Financial Information

(dollars in thousands)

(unaudited)

 

		Three Months Ended September 30, (b)								Nine Months Ended September 30, (b)
		2013				2012 (c)				2013				2012 (c)
Fluid & Metering Technologies
Net sales		$	212,337			$	198,000			$	649,580			$	621,433
Operating income (c)			51,736				42,368				155,930				136,175
Operating margin			24.4	%			21.4	%			24.0	%			21.9	%
Depreciation and amortization		$	6,981			$	7,246			$	20,953			$	22,194
Capital expenditures			2,843				2,702				8,126				9,752
Health & Science Technologies
Net sales		$	178,628			$	176,225			$	532,363			$	520,574
Operating income (c)			36,775				30,480				103,564				90,494
Operating margin			20.6	%			17.3	%			19.5	%			17.4	%
Depreciation and amortization		$	10,798			$	10,273			$	32,537			$	29,293
Capital expenditures			2,823				4,622				9,777				10,435
Fire & Safety/Diversified Products
Net sales		$	101,077			$	108,199			$	326,826			$	328,173
Operating income (c)			22,119				26,807				74,027				78,165
Operating margin			21.9	%			24.8	%			22.7	%			23.8	%
Depreciation and amortization		$	1,726			$	1,622			$	5,175			$	5,225
Capital expenditures			776				1,230				2,997				5,183
Company
Net sales		$	490,617			$	479,859			$	1,503,510			$	1,463,420
Operating income (c)			97,369				87,673				291,640				268,411
Operating margin			19.8	%			18.3	%			19.4	%			18.3	%
Depreciation and amortization (d)		$	19,779			$	19,545			$	59,695			$	57,938
Capital expenditures			7,318				9,208				23,140				27,266

 

(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.