IEX-2014.01.29-8K


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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: January 29, 2014
(Date of earliest event reported)

IDEX CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
1-10235
36-3555336
(State of
(Commission File Number)
(IRS Employer
Incorporation)
 
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 January 29, 2014, IDEX Corporation (the “Company”) issued a press release announcing financial results for the period ended December 31, 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 January 29, 2014 announcing IDEX Corporation’s quarterly operating results


















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.

IDEX CORPORATION
By:
/s/ Heath A. Mitts    
Heath A. Mitts
Vice President and Chief Financial Officer

January 30, 2014







Exhibit Index

Exhibit
Number
 

Description



99.1
Press release dated January 29, 2014 announcing IDEX Corporation’s quarterly operating results





IEX-2014.01.29-EX99.1


EXHIBIT 99.1


IDEX REPORTS 15 PERCENT EPS GROWTH AND 28 PERCENT FREE CASH FLOW GROWTH IN 2013; Q4 EPS OF 82 CENTS DRIVEN BY 20 PERCENT OPERATING MARGIN

LAKE FOREST, IL, JANUARY 29 - IDEX Corporation (NYSE: IEX) today announced its financial results for the three- and twelve- month periods ended December 31, 2013.
  
Full Year 2013 Highlights
Orders of $2.1 billion increased 7 percent compared to the prior year (+5 percent organic and +2 percent acquisition).
Sales of $2.0 billion increased 4 percent compared to the prior year (+2 percent organic and +2 percent acquisition).
Gross margin of 43.1 percent was up 200 basis points from the prior year.
Operating margin of 19.5 percent was up 110 basis points from the adjusted prior year.
Net income of $255 million represents an increase of 14 percent compared to the adjusted prior year net income of $224 million.
EPS of $3.09 was 41 cents, or 15 percent, higher than the adjusted prior year EPS of $2.68.
EBITDA of $475 million, which represents an 8 percent increase from the adjusted prior year, was 23 percent of sales and covered interest expense by over 11 times.
Free cash flow of $379 million, which represents a 28 percent increase from the prior year, was 148 percent of net income.
The Company completed the repurchase of 2.9 million shares of common stock for $166 million in 2013.


Fourth Quarter 2013
Orders in the quarter of $519 million were up 8 percent from the prior year period. Sales in the quarter totaled $521 million, 6 percent higher than the prior year period. For the quarter, on an organic basis, orders were 7 percent higher and sales were 5 percent higher than the prior year period.
  
Fourth quarter 2013 operating income was $104 million, up 14% from the adjusted prior year period. This resulted in an operating margin of 20 percent, up 150 basis points from the adjusted prior year operating margin, primarily due to volume leverage and productivity. Operating income includes $6 million of charges associated with cost-out actions across our three segments partially offset by a $4 million gain on the settlement of the contingent consideration agreement related to the Matcon business acquired in July 2012.

Fourth quarter net income was $68 million, an increase of 18 percent from the adjusted prior year. Fourth quarter earnings per share were 82 cents, an increase of 13 cents, or 19 percent, from the adjusted prior year.

Free cash flow of $95 million was a 20 percent increase from the prior year and 140 percent of net income.






“IDEX finished 2013 with a strong fourth quarter, culminating in a record year. Our flexible operating model allowed us to improve our cost structure and reinvest in organic growth. For the full year 2013, we delivered 7 percent order growth, expanded operating margins to 19.5 percent, generated record free cash flow of $379 million, and achieved 15 percent EPS growth.

The fourth quarter saw markets continue to stabilize, and sustained order growth in the second half of 2013 provides solid momentum heading into 2014. In the fourth quarter, we took targeted cost-out actions across our three segments to further optimize our operating footprint. Based on these actions and improved performance throughout 2013, we now expect the Company’s operating margins for 2014 to exceed 20 percent. I am proud of our 2013 accomplishments and I am confident in IDEX’s ability to capitalize on long-term growth opportunities.

Fueled by free cash flow conversion of 148 percent in 2013, we returned a record $240 million to shareholders via dividends and share repurchases. Our balance sheet and ability to generate cash are stronger than ever.

As we enter 2014, we will continue to rigorously allocate our capital and people where we can create advantage and value. Our strategy of fully funding organic growth is unchanged, and we are committed to further increasing shareholder value through strategic acquisitions, shareholder dividends and share repurchases.

We expect global end market demand to remain uneven. Regardless, with our focused efforts, we anticipate 3 to 5 percent organic revenue growth in 2014 and EPS of $3.33 to $3.43, up 8 to 11 percent compared to 2013. We expect first quarter 2014 EPS to be in the range of 83 to 85 cents, up 12 to 15 percent.”
                                
Andrew K. Silvernail
Chairman and Chief Executive Officer


Fourth Quarter 2013 Business Highlights (Operating margin excludes non-cash impairment and restructuring charges in 2012)

Fluid & Metering Technologies
Sales in the fourth quarter of $222 million reflected a 5 percent increase compared to the fourth quarter of 2012 (+4 percent organic and +1 percent foreign currency translation).
Operating margin of 24.9 percent represented a 390 basis point improvement compared with the fourth quarter of 2012 primarily due to higher volume and productivity initiatives partially offset by $2 million of charges associated with cost-out actions taken during the quarter.

Health & Science Technologies
Sales in the fourth quarter of $182 million reflected a 4 percent increase compared to the fourth quarter of 2012 (+2 percent organic, +3 percent acquisitions and -1 percent foreign currency translation).
Operating margin of 18.2 percent represented a 20 basis point decrease compared with the fourth quarter of 2012 primarily due to $3 million of charges associated with cost-out actions taken during the quarter, partially offset by higher volume and productivity initiatives.

Fire & Safety/Diversified Products
Sales in the fourth quarter of $118 million reflected a 9 percent increase compared to the fourth quarter of 2012 (+8 percent organic and +1 percent foreign currency translation).
Operating margin of 24.3 percent represented a 10 basis point increase compared with the fourth quarter of 2012 primarily due to higher volume and productivity initiatives partially offset by $1 million of charges associated with cost-out actions taken during the quarter.

For the fourth quarter of 2013, Fluid & Metering Technologies contributed 42 percent of sales and 47 percent of operating income; Health & Science Technologies accounted for 35 percent of sales and 28 percent of operating income; and Fire & Safety/Diversified Products represented 23 percent of sales and 25 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)



Conference Call to be Broadcast over the Internet
IDEX will broadcast its fourth quarter earnings conference call over the Internet on Thursday, January 30, 2014 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 # 30410743.

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)





IDEX CORPORATION
Condensed Statements of Consolidated Operations
(in thousands except per share amounts)
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Twelve Months Ended
 
 
 
December 31,
 
December 31,
 
 
 
2013
 
2012
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
Net sales
 
 
$
520,620

 
$
490,838

 
$
2,024,130

 
$
1,954,258

Cost of sales
 
 
293,611

 
287,980

 
1,150,766

 
1,150,558

Gross profit
 
 
227,009

 
202,858

 
873,364

 
803,700

Selling, general and administrative expenses
 
 
123,136

 
112,059

 
477,851

 
444,490

Impairment
 
 

 
198,519

 

 
198,519

Restructuring expenses
 
 

 
17,869

 

 
32,473

Operating income (loss)
 
 
103,873

 
(125,589
)
 
395,513

 
128,218

Other (income) expense - net
 
 
696

 
(217
)
 
178

 
(236
)
Interest expense
 
 
10,482

 
10,516

 
42,206

 
42,250

Income (loss) before income taxes
 
 
92,695

 
(135,888
)
 
353,129

 
86,204

Provision (benefit) for income taxes
 
 
25,140

 
(16,869
)
 
97,914

 
48,574

Net income (loss)
 
 
$
67,555

 
$
(119,019
)
 
$
255,215

 
$
37,630

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per Common Share:
 
 
 
 
 
 
 
 
 
Basic earnings (loss) per common share (a)
 
 
$
0.83

 
$
(1.45
)
 
$
3.11

 
$
0.45

Diluted earnings (loss) per common share (a)
 
 
$
0.82

 
$
(1.45
)
 
$
3.09

 
$
0.45

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic weighted average common shares outstanding
 
 
$
80,782

 
$
82,296

 
$
81,517

 
$
82,689

 
 
 
 
 
 
 
 
 
 
Diluted weighted average common shares outstanding
 
 
$
81,854

 
$
82,296

 
$
82,489

 
$
83,641







Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
 
 
 
 
 
 
 
December 31,
 
December 31,
 
 
 
 
 
 
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
Current assets
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
 
 
 
 
 
$
439,629

 
$
318,864

Receivables - net
 
 
 
 
 
 
253,226

 
256,095

Inventories
 
 
 
 
 
 
230,967

 
234,950

Other current assets
 
 
 
 
 
 
67,131

 
71,956

Total current assets
 
 
 
 
 
 
990,953

 
881,865

Property, plant and equipment - net
 
 
 
 
 
 
213,488

 
219,161

Goodwill and intangible assets
 
 
 
 
 
 
1,660,683

 
1,663,099

Other noncurrent assets
 
 
 
 
 
 
22,453

 
21,265

Total assets
 
 
 
 
 
 
$
2,887,577

 
$
2,785,390

 
 
 
 
 
 
 
 
 
 
Liabilities and shareholders' equity
 
 
 
 
 
 
 
 
 
Current liabilities
 
 
 
 
 
 
 
 
 
Trade accounts payable
 
 
 
 
 
 
$
133,312

 
$
117,341

Accrued expenses
 
 
 
 
 
 
150,751

 
150,176

Short-term borrowings
 
 
 
 
 
 
1,871

 
7,335

Dividends payable
 
 
 
 
 
 
18,675

 
16,575

Total current liabilities
 
 
 
 
 
 
304,609

 
291,427

Long-term borrowings
 
 
 
 
 
 
772,005

 
779,241

Other noncurrent liabilities
 
 
 
 
 
 
237,974

 
249,724

Total liabilities
 
 
 
 
 
 
1,314,588

 
1,320,392

Shareholders' equity
 
 
 
 
 
 
1,572,989

 
1,464,998

Total liabilities and shareholders' equity
 
 
 
 
 
 
$
2,887,577

 
$
2,785,390







IDEX CORPORATION
Company and Business Group Financial Information
(dollars in thousands)
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
Twelve Months Ended
 
 
 
 
 
December 31, (b)
 
 
December 31,  (b)
 
 
 
 
 
2013
 
 
2012 (c)
 
 
2013
 
 
2012 (c)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fluid & Metering Technologies
 
 
 
 
 
 
 
 
 
 
 
 
 
  Net sales
 
 
$
222,234

 
 
$
211,855

 
 
$
871,814

 
 
$
833,288

 
 
  Operating income (c)
 
55,326

 
 
44,455

 
 
211,256

 
 
180,630

 
 
  Operating margin
 
24.9

%
 
21.0

%
 
24.2

%
 
21.7

%
 
  Depreciation and amortization
 
$
6,680

 
 
$
7,445

 
 
$
27,633

 
 
$
29,637

 
 
  Capital expenditures
 
3,455

 
 
3,784

 
 
11,581

 
 
13,535

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Health & Science Technologies
 
 
 
 
 
 
 
 
 
 
 
 
 
  Net sales
 
 
$
182,287

 
 
$
174,661

 
 
$
714,650

 
 
$
695,235

 
 
  Operating income (c)
 
33,143

 
 
32,214

 
 
136,707

 
 
122,708

 
 
  Operating margin
 
18.2

%
 
18.4

%
 
19.1

%
 
17.6

%
 
  Depreciation and amortization
 
$
10,959

 
 
$
10,687

 
 
$
43,496

 
 
$
39,981

 
 
  Capital expenditures
 
2,503

 
 
2,704

 
 
12,280

 
 
13,140

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fire & Safety/Diversified Products
 
 
 
 
 
 
 
 
 
 
 
 
 
  Net sales
 
 
$
118,223

 
 
$
108,880

 
 
$
445,049

 
 
$
437,053

 
 
  Operating income (c)
 
28,703

 
 
26,296

 
 
102,730

 
 
104,461

 
 
  Operating margin
 
24.3

%
 
24.2

%
23.1

%
 
23.9

%
 
  Depreciation and amortization
 
$
1,677

 
 
$
1,881

 
 
$
6,852

 
 
$
7,107

 
 
  Capital expenditures
 
2,043

 
 
1,471

 
 
5,040

 
 
6,654

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Company
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Net sales
 
 
$
520,620

 
 
$
490,838

 
 
$
2,024,130

 
 
$
1,954,258

 
 
  Operating income (c)
 
103,873

 
 
90,799

 
 
395,513

 
 
359,210

 
 
  Operating margin
 
20.0

%
 
18.5

%
19.5

%
 
18.4

%
 
  Depreciation and amortization (d)
 
$
19,639

 
 
$
20,374

 
 
$
79,334

 
 
$
78,312

 
 
  Capital expenditures
 
8,396

 
 
8,254

 
 
31,536

 
 
35,520

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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 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 the impairment charge (for the Fluid & Metering Technologies and Health & Science Technologies segments) and restructuring related charges for 2012.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(d)
Depreciation and amortization excludes amortization of debt issuance expenses.