UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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, 2014
(Date of earliest event reported)
IDEX CORPORATION
(Exact name of registrant as specified in its charter)
Delaware | 1-10235 | 36-3555336 | ||
(State or other jurisdiction | (Commission File Number) | (IRS Employer | ||
of 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 below 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)) | |
Item 2.02 – Results of Operations and Financial Condition.
On July 22, 2014, IDEX Corporation (the “Company”) issued a press release announcing financial results for the period ended June 30, 2014.
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, 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 | ||
Senior Vice President and Chief Financial Officer | ||
July 22, 2014 | ||
EXHBIT INDEX
Exhibit Number | Description | |
99.1 | Press release dated July 22, 2014 | |
EXHIBIT 99.1
For further information: TRADED: NYSE (IEX)
Investor Contact:
Heath Mitts
Senior Vice President and Chief Financial Officer
(847) 498-7070
TUESDAY, JULY 22, 2014
IDEX REPORTS SECOND QUARTER EPS OF 88 CENTS AND RAISES FULL YEAR EPS GUIDANCE TO $3.50 - $3.55
LAKE FOREST, IL, JULY 22 - IDEX Corporation (NYSE: IEX) today announced its financial results for the three month period ended June 30, 2014.
Second Quarter 2014 Highlights
• | Orders increased 9 percent, 7 percent organically |
• | Sales increased 5 percent, 4 percent organically |
• | Operating margin of 20.5 percent was up 130 basis points from the prior year |
• | EPS of 88 cents was 16 percent higher than prior year EPS of 76 cents |
• | Acquired Aegis Flow Technologies |
Second Quarter 2014
Orders in the quarter of $551 million were up 9 percent (+7 percent organic and +2 percent foreign currency translation) compared with the prior year period and sales of $547 million were up 5 percent (+4 percent organic and +1 percent foreign currency translation) compared with last year.
Second quarter 2014 gross margin of 44.1 percent was up 110 basis points from the prior year period, while operating income of $112 million was up 13 percent from the prior year. This resulted in an operating margin of 20.5 percent, up 130 basis points from prior year operating margin, primarily due to volume leverage and productivity.
Second quarter net income was $72 million, an increase of 15 percent from the prior year period. Second quarter earnings per share were 88 cents, an increase of 12 cents, or 16 percent, from the prior year. EBITDA of $131 million, which was a 10 percent increase from the prior year, was 24 percent of sales and covered interest expense by over 12 times, while free cash flow of $80 million was over 110 percent of net income.
The Company completed the repurchase of 602 thousand shares of common stock for $46 million in the quarter. Year-to-date, the Company has repurchased 1.2 million shares of common stock for $86 million.
“IDEX completed the first half of 2014 with another solid quarter and good momentum for the second half of the year. We have a clear focus to invest in organic growth, while achieving productivity gains. These investments require a greater use of free cash flow, but provide a base for long-term organic growth. The focus on various organic initiatives and core product line strategies is yielding benefits and, as a result, organic revenue growth has accelerated to 6 percent in the first-half of 2014. |
We are focused on total shareholder return by increasing organic growth and maintaining a disciplined approach to acquisitions, shareholder dividends and share repurchases. In April, we successfully completed the acquisition of Aegis Flow Technologies (“Aegis”), a leader in specialty chemical processing valves. Aegis will operate in our Chemical, Food & Process platform and expand our presence in the region around the Gulf of Mexico, serving the chemical, petro-chemical, and chlor-alkali industries. We continue to actively pursue multiple acquisition opportunities in an increasingly active M&A environment. We also continue to execute our share repurchase and shareholder dividend programs, which we expect to remain unchanged in the second half of 2014. |
Geographically, we see stability in North America and Europe, and continued volatility in Asia. Additionally, we see sales growth in the second half for the FMT and HST segments improving over the first half of the year. Based on these combined factors, we now expect to deliver full-year 2014 organic growth of 5 to 6 percent with operating margins greater than 20 percent. We project third quarter EPS in the range of 83 to 85 cents, and we are increasing our full year 2014 EPS guidance to $3.50 to $3.55.” |
Andrew K. Silvernail |
Chairman and Chief Executive Officer |
Second Quarter 2014 Business Highlights
Fluid & Metering Technologies
• | Sales in the second quarter of $226 million reflected a slight increase compared to the second quarter of 2013 (-2 percent organic, +1 percent acquisition and +1 percent foreign currency translation). |
• | Operating margin of 24.6 percent represented a 30 basis point decrease compared with the second quarter of 2013 primarily due to acquisition related charges. |
Health & Science Technologies
• | Sales in the second quarter of $186 million reflected a 3 percent increase compared to the second quarter of 2013 (+1 percent organic and +2 percent foreign currency translation). |
• | Operating margin of 19.5 percent represented a 40 basis point increase compared with the second quarter of 2013 primarily due to higher volume and productivity initiatives. |
Fire & Safety/Diversified Products
• | Sales in the second quarter of $136 million reflected a 19 percent increase compared to the second quarter of 2013 (+17 percent organic and +2 percent foreign currency translation). |
• | Operating margin of 26.4 percent represented a 570 basis point increase compared with the second quarter of 2013 primarily due to volume leverage and productivity initiatives as well as a prior year charge associated with a facility disposal in 2013. |
For the second quarter of 2014, Fluid & Metering Technologies contributed 41 percent of sales and 44 percent of operating income; Health & Science Technologies accounted for 34 percent of sales and 28 percent of operating income; and Fire & Safety/Diversified Products represented 25 percent of sales and 28 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.
Conference Call to be Broadcast over the Internet
IDEX will broadcast its second quarter earnings conference call over the Internet on Wednesday, July 23, 2014 at 9:30 a.m. CT. Chairman and Chief Executive Officer Andy Silvernail and Senior 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 877.660.6853 (or 201.612.7415 for international participants) using the ID # 13583593.
IDEX CORPORATION | |||||||||||||||||
Condensed Statements of Consolidated Operations | |||||||||||||||||
(in thousands except per share amounts) | |||||||||||||||||
(unaudited) | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
June 30, | June 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Net sales | $ | 546,693 | $ | 518,445 | $ | 1,090,689 | $ | 1,012,893 | |||||||||
Cost of sales | 305,561 | 295,596 | 605,137 | 578,047 | |||||||||||||
Gross profit | 241,132 | 222,849 | 485,552 | 434,846 | |||||||||||||
Selling, general and administrative expenses | 129,044 | 123,290 | 259,629 | 240,575 | |||||||||||||
Operating income | 112,088 | 99,559 | 225,923 | 194,271 | |||||||||||||
Other (income) - net | 137 | 573 | (707 | ) | (706 | ) | |||||||||||
Interest expense | 10,405 | 10,597 | 20,862 | 21,154 | |||||||||||||
Income before income taxes | 101,546 | 88,389 | 205,768 | 173,823 | |||||||||||||
Provision for income taxes | 29,769 | 25,828 | 59,443 | 49,962 | |||||||||||||
Net income | $ | 71,777 | $ | 62,561 | $ | 146,325 | $ | 123,861 | |||||||||
Earnings per Common Share: | |||||||||||||||||
Basic earnings per common share (a) | $ | 0.89 | $ | 0.76 | $ | 1.81 | $ | 1.50 | |||||||||
Diluted earnings per common share (a) | $ | 0.88 | $ | 0.76 | $ | 1.79 | $ | 1.49 | |||||||||
Share Data: | |||||||||||||||||
Basic weighted average common shares outstanding | $ | 80,106 | $ | 81,829 | $ | 80,317 | $ | 82,013 | |||||||||
Diluted weighted average common shares outstanding | $ | 81,149 | $ | 82,734 | $ | 81,362 | $ | 82,943 | |||||||||
Condensed Consolidated Balance Sheets | |||||||||||||
(in thousands) | |||||||||||||
(unaudited) | |||||||||||||
June 30, | December 31, | ||||||||||||
2014 | 2013 | ||||||||||||
Assets | |||||||||||||
Current assets | |||||||||||||
Cash and cash equivalents | $ | 485,335 | $ | 439,629 | |||||||||
Receivables - net | 272,151 | 253,226 | |||||||||||
Inventories | 254,182 | 230,967 | |||||||||||
Other current assets | 69,858 | 67,131 | |||||||||||
Total current assets | 1,081,526 | 990,953 | |||||||||||
Property, plant and equipment - net | 223,395 | 213,488 | |||||||||||
Goodwill and intangible assets | 1,664,028 | 1,660,683 | |||||||||||
Other noncurrent assets | 22,048 | 22,453 | |||||||||||
Total assets | $ | 2,990,997 | $ | 2,887,577 | |||||||||
Liabilities and shareholders' equity | |||||||||||||
Current liabilities | |||||||||||||
Trade accounts payable | $ | 146,827 | $ | 133,312 | |||||||||
Accrued expenses | 142,493 | 150,751 | |||||||||||
Short-term borrowings | 111,539 | 1,871 | |||||||||||
Dividends payable | 22,516 | 18,675 | |||||||||||
Total current liabilities | 423,375 | 304,609 | |||||||||||
Long-term borrowings | 705,326 | 772,005 | |||||||||||
Other noncurrent liabilities | 237,409 | 237,974 | |||||||||||
Total liabilities | 1,366,110 | 1,314,588 | |||||||||||
Shareholders' equity | 1,624,887 | 1,572,989 | |||||||||||
Total liabilities and shareholders' equity | $ | 2,990,997 | $ | 2,887,577 | |||||||||
IDEX CORPORATION | ||||||||||||||||||||||
Company and Business Group Financial Information | ||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||
June 30, (b) | June 30, (b) | |||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||||
Fluid & Metering Technologies | ||||||||||||||||||||||
Net sales | $ | 226,100 | $ | 225,488 | $ | 449,461 | $ | 437,243 | ||||||||||||||
Operating income (c) | 55,623 | 56,115 | 112,030 | 104,194 | ||||||||||||||||||
Operating margin | 24.6 | % | 24.9 | % | 24.9 | % | 23.8 | % | ||||||||||||||
Depreciation and amortization | $ | 6,746 | $ | 7,012 | $ | 13,298 | $ | 13,972 | ||||||||||||||
Capital expenditures | 3,554 | 2,507 | 7,563 | 5,283 | ||||||||||||||||||
Health & Science Technologies | ||||||||||||||||||||||
Net sales | $ | 185,672 | $ | 180,867 | $ | 372,047 | $ | 353,735 | ||||||||||||||
Operating income (c) | 36,137 | 34,522 | 72,366 | 66,789 | ||||||||||||||||||
Operating margin | 19.5 | % | 19.1 | % | 19.5 | % | 18.9 | % | ||||||||||||||
Depreciation and amortization | $ | 10,690 | $ | 10,947 | $ | 21,399 | $ | 21,739 | ||||||||||||||
Capital expenditures | 5,318 | 4,168 | 8,827 | 6,954 | ||||||||||||||||||
Fire & Safety/Diversified Products | ||||||||||||||||||||||
Net sales | $ | 136,182 | $ | 114,236 | $ | 273,466 | $ | 225,749 | ||||||||||||||
Operating income (c) | 35,985 | 23,676 | 75,633 | 51,908 | ||||||||||||||||||
Operating margin | 26.4 | % | 20.7 | % | 27.7 | % | 23.0 | % | ||||||||||||||
Depreciation and amortization | $ | 1,672 | $ | 1,741 | $ | 3,352 | $ | 3,449 | ||||||||||||||
Capital expenditures | 2,692 | 741 | 4,499 | 2,221 | ||||||||||||||||||
Company | ||||||||||||||||||||||
Net sales | $ | 546,693 | $ | 518,445 | $ | 1,090,689 | $ | 1,012,893 | ||||||||||||||
Operating income (c) | 112,088 | 99,559 | 225,923 | 194,271 | ||||||||||||||||||
Operating margin | 20.5 | % | 19.2 | % | 20.7 | % | 19.2 | % | ||||||||||||||
Depreciation and amortization (d) | $ | 19,416 | $ | 20,077 | $ | 38,673 | $ | 39,916 | ||||||||||||||
Capital expenditures | 12,490 | 8,197 | 23,299 | 15,822 | ||||||||||||||||||
(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 Aegis (April 2014) in the Fluid & Metering Technologies segment and FTL (March 2013) in the Health & Science Technologies segment from the date of acquisition. | |||||||||||||||||||||
(c) | Segment operating income excludes unallocated corporate operating expenses. | |||||||||||||||||||||
(d) | Depreciation and amortization excludes amortization of debt issuance expenses. | |||||||||||||||||||||