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: November 7, 2016
(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 7.01 Regulation FD Disclosure
On November 7, 2016 IDEX Corporation (the "Company") presented at the Baird Analyst Day. A copy of the slide presentation used by the Company is attached as Exhibit 99.1 to this Current Report on Form 8-K.
Exhibit 99.1 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.
The information in this Current Report furnished pursuant to Items 7.01 and 9.01, 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. The furnishing of the information in Items 7.01 and 9.01 of this Current Report is not intended to, and does not, constitute a representation that such furnishing is required by Regulation FD or that the information contained in Items 7.01 or 9.01 of this Current Report is material investor information that is not otherwise publicly available.
Item 9.01 - Financial Statements and Exhibits.
(d) | Exhibits |
99.1 | IDEX Corporation presentation dated November 7, 2016. |
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/ MICHAEL J. YATES | |
Michael J. Yates | ||
Vice President, Chief Financial Officer and Chief Accounting Officer | ||
November 8, 2016 | ||
EXHBIT INDEX
Exhibit Number | Description | |
99.1 | IDEX Corporation presentation dated November 7, 2016 | |
IDEX Proprietary & Confidential
BAIRD ANALYST DAY
November 7, 2016
IDEX Proprietary & Confidential
Presenters
• Mike Yates, Interim CFO & Chief Accounting Officer
• Andrew Silvernail, Chairman and CEO
• Eric Ashleman, Sr. VP and Chief Operating Officer
• Marc Uleman, Group President, IDEX Sealing Solutions
2
IDEX Proprietary & Confidential
Andrew Silvernail, Chairman & CEO
IDEX Proprietary & Confidential
IDEX Corporation Overview
$2 BILLION SUPPLIER of highly
engineered industrial and technology
solutions for mission critical niches
Global strategy to build defensible,
differentiated positions in niche
GROWTH BUSINESSES that are
enabled by OUTSTANDING TEAMS
Our objective is to provide consistent
DOUBLE DIGIT EARNINGS GROWTH
and STRONG CASH FLOW with
SUPERIOR RETURN on invested
capital
4
IDEX Proprietary & Confidential
Global Footprint
7000+ Employees
60+ Business units
5
IDEX Proprietary & Confidential
2015 REVENUE $861 $739 $424
% OF TOTAL 43% 36% 21%
2015
OPERATING MARGIN*
25% 22% 27%
2015 EBITDA MARGIN* 28% 28% 29%
BUSINESS PLATFORMS
Industrial
Water
Energy
Agriculture
Valves
Scientific Fluidics
Optics & Photonics
Material Processing
Sealing Solutions
Industrial
Dispensing
BAND–IT
Fire Suppression
Rescue
FLUID & METERING
TECHNOLOGY
HEALTH & SCIENCE
TECHNOLOGY
FIRE & SAFETY /
DIVERSIFIED
* Adjusted
IDEX At A Glance
6
IDEX Proprietary & Confidential
Timeline: Strategic Evolution
7
2000 – 2011 2011–2016 2016–2021
VS. S&P 500
79th Percentile
• Vision & Values
• Talent & team
development
• Formalized IDEX
Operating Model
• Organic
performance
• Disciplined capital &
resource deployment
• Globalization
• Professionalized
management
• Portfolio transition
• Competitive scale
Superior niche
businesses
Leadership
• Portfolio mgmt.
• Disciplined capital
deployment
VS. S&P 500
64th Percentile
VS. S&P 500
>75th Percentile
1 3 2
1. January 1 2000–August 10 2011
2. August 10 2011–September 30 2016
3. September 30 2016–Forward
IDEX Proprietary & Confidential 8
Our Purpose
IDEX Proprietary & Confidential
Strategy: Where We’re Going
9
IDEX Proprietary & Confidential
1. Accelerate organic performance in
“Integrated Growth” “Targeted Growth”
businesses
2. Improve positioning and profit
profile of underperforming businesses
3. Build Business Segments in Fluids,
Health & Science, Safety, and
Engineered Fastening through M&A
Double–digit EPS
Superior ROIC
• Best in class
• engagement
2017–2019 Strategy
STRATEGIC PRIORITIES
PERFORMANCE
OBJECTIVES
Top Quartile
Total
Shareholder
Return
STRATEGIC CAPABILITIES
1
2
3
1
2
3
10
IDEX Proprietary & Confidential
Portfolio Update – Progress Report
11
Portfolio
2015
% of Rev.
2016 Actions
2016
% of Rev.
Status
Integrated
Growth
26%
• Acquired Akron & AWG
• Healthy innovation pipeline
32%
Targeted
Growth
39%
• Industrial/Energy macro headwinds
• Expanding margin >100 bps
• Acquired SFC Koenig
41%
Outperform 8% • Core organic growth improvement
• Sustained high margins
7 %
Fix
27%
• Margins up > 300 bps
• Divested 3 non–strategic BU’s
20%
Emerging
Markets
• Strong India performance
• Opening new shared mfg. facility in China
Heavy Focus on Targeted Growth & China
IDEX Proprietary & Confidential
Five Year M&A Strategic Focus
Significant opportunities to continue to expand via M&A in our core niche markets
FLUID TECHNOLOGIES
$20B Market
HEALTH & SCIENCE
$2.5B Market
SAFETY
$3.0B Market
ENGINEERED FASTENERS & CONNECTORS
$3.0B Market
12
IDEX Proprietary & Confidential
M&A Implementation Plan
Multi–pronged approach to developing and executing on M&A pipeline
• Cultivate and execute on strong history and deep
relationships through years of market knowledge
and company interactions
• Analyze and engage targeted private equity holdings
that fit well with our core strategy and return profile
• Identify, analyze and engage carve outs
of publically held as well as small to
middle market enterprises
IDEX
PROPRIETARY
PRIVATE
EQUITY OWNED
CARVE OUTS
13
1.
2.
3.
13
IDEX Proprietary & Confidential
IDEX Five Year Capital Availability
14
• Organic rev growth of 2–4%, total rev
growth of 8–10% per annum
• 5 Year Total EBITDA: $3,900M
• Operating Cap Ex & W/C: ($420M)
• Taxes: ($760M)
• Dividends: ($720M)
• Interest: ($300M)
• Debt Capacity: $1,000M @ 2.0–2.5x
gross leverage
$1,700
$1,000
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
Excess Cash from Ops Debt Capacity
Five Year Capital Availability Key Assumptions
($ in M)
$2.7 billion of capital availability over five years;
$500 – $550M available annually for M&A or share repurchase
IDEX Proprietary & Confidential
OBJECTIVES: Double-digit EPS CAGR, strong
CASH CONVERSION and SUPERIOR RETURNS
STRATEGIC POSITIONING in highly engineered,
mission critical niches
OUTSTANDING TEAMS who deliver with our
Values and Operating Model
Strong balance sheet, cash flow and capital
deployment to MAXIMIZE TSR
IDEX Summary
CREATING
VALUE
FOR SHAREHOLDERS
15
IDEX Proprietary & Confidential
Fire & Rescue Platform
IDEX Proprietary & Confidential
Fire & Rescue Overview
17
IDEX Fire & Rescue:
• Deployed $275M of capital with
Akron Brass and AWG
• Leading position within $1.4B product
available market of pumps, water
distribution, electronics, and
rescue tools
• Serves stable markets that perform
well over the long term
• The most complete offering of
products to help rescue personnel do
the mission critical aspects of the job
• Superior global penetration with
more room to grow
IDEX Proprietary & Confidential
Platform Overview
18
We have assembled nearly $400M of critical scale within Fire & Rescue
Pumps
26%
Pump
Accessories
10%
Valves
5% Monitors &
Nozzles
16%
Lighting
11%
Rescue Tools
24%
Industrial
Products
8%
Competitive Advantage Via Scale
• 1200 employees
• 330 technical and
commercial specialists
• Efficient production &
sourcing
• IDEX balance sheet
IDEX Proprietary & Confidential
Fire Suppression Portfolio
19
FIRE SUPPRESSION
SHARE POSITION DESCRIPTION PRODUCTS COMPANY
#1 Pumps N.A.
#1 Modules N.A.
#1 Nozzles N.A.
#1 Monitors N.A.
#1 Valves N.A.
#1 Multiplexing N.A.
#1 Pressure
Governor N.A.
#1 Pumps UK/Europe
#1 Nozzles Europe
#1 Monitors Europe
#1 Fittings Europe
Truck Mounted Pumps
Pump Modules
Portable Pumps
Engine Driven Units
Electronics
Brass foundry
Nozzles
Monitors
Valves
Electronics
Scene Lighting
Vehicle Lighting
Truck Mounted Pumps
Portable Pumps
Foam
CAFS
Trailer/Skid Mounted
Pumps
Nozzles
Couplings
Fittings
Monitors
Pump Accessories
19
IDEX Proprietary & Confidential
Product Breadth – Mobile Mechanical Components
20
Full coverage of all fire suppression components
IDEX Proprietary & Confidential
Portfolio Breadth – Systems & Connectivity
21
Breakthrough opportunities to innovate and integrate
IDEX Proprietary & Confidential
2016 Acquisitions – Integration Update
22
Dedicated integration resources are ahead of plan
• IDEX Operating Model
8020
Lean Enterprise
• Value Drivers
Infrastructure
Facilities
Sourcing
Commercial Coverage
Technology
• Breakthrough Growth
Innovation Pipeline
Geographic Expansion
IDEX Proprietary & Confidential
Innovation Snapshot – Integration & Automation
23
EP = NP + FL + EL + AL
What line was that?
GPM = 29.7 x d² x √NP
Problem
• 69% of firefighters in the US are volunteer ….. Numbers are shrinking fast
• Higher training demands and requirements
• Emergency calls continue to rise
A fire pump operator must
perform 30+ actions,
decisions and calculations
flawlessly during the first
3 minutes of fire scene
Automated Solutions will enhance safety &
efficiency while reducing necessary
manpower on a fire scene
IDEX Proprietary & Confidential
Innovation Snapshot – Akron Brass UltraJet
24
• Providing firefighters the most versatile firefighting nozzle
• Ideal for Water, Foam & CAFS Applications
• Operates like traditional nozzles
IDEX Proprietary & Confidential
Rescue Technologies Platform
25
Hydraulic Cutters &
Spreaders
Battery Technology
Portable Power
Telescoping Rams
Re–railing Equipment
Electronics
Hydraulic Cutters &
Spreaders
Battery Technology
Portable Power
Handheld Rescue
Telescoping Rams
Hydraulic Cutters &
Spreaders
Battery Technology
Portable Power
SHARE POSITION DESCRIPTION PRODUCTS COMPANY
Pneumatic Lifting Bags
Jumping Cushions
#1 Europe
#1 China Import
#1 North America
#1 China
#1 Global
IDEX Proprietary & Confidential
Innovation Snapshot – eDraulic Rescue Tools
26
Solved a critical problem and created an entirely new segment
i–eDRAULIC
Intelligent Rescue tools
2010 2012 2014 2015 2017
Ev
o
lu
tio
n
eDRAULIC facelift &
Portfolio completion
First battery driven
telescopic ram
Dinglee-eDRAULIC
Introduce battery tools in
Chinese market tailored to
specific market needs
cloud
$35M in 6 yrs.
IDEX Proprietary & Confidential
Innovation Snapshot – StrongArm Rescue Tool
27
Gaining strong momentum since 2015 introduction
• Smaller, hand–held rescue device
• Interchangeable tips
• Targeted Rapid Intervention
Teams in Fire markets
• Adjacent market entry for SWAT
and specialty law enforcement
IDEX Proprietary & Confidential
Global Footprint
28
Global footprint touches all major markets
Erlangen,
Germany
Ballendorf,
Germany
Tianjin, China
Warwick, UK
Ravensburg,
Germany Additional EM access within
IDEX India & China shared mfg.
Akron, OH
Columbus, OH
Shelby, NC
Ocala, FL
IDEX Proprietary & Confidential
Growth in Emerging Markets
29
Actively moving resources to these regions
Tianjin, China
Suzhou, China (Open 12/16)
Vadodara, India
• Developing high–end import
markets and local–for–local
• Rising standards of living
drive technology adoption
• Full range of technologies to
establish specification points
• Disruptive potential of
portability and lighter weight
IDEX Proprietary & Confidential
Summary
30
More room to grow organically and inorganically
• Global markets are stable
• IDEX is the global market leader
• Integration driving value quickly
• Growth through innovation,
emerging markets penetration,
strong execution
IDEX Proprietary & Confidential 31
So much more than a tagline …
IDEX Proprietary & Confidential
Sealing Solutions Platform
IDEX Proprietary & Confidential 33 3
IDEX Sealing Solutions at a Glance: 700 employees, 175+ MUS$
Precision Polymer Engineering
SFC Koenig FTL Technology
Novotema S.p.A
High Performance Materials
for Critical Applications
Complex profiles in high
performance elastomers for
demanding applications
Custom
engineered
sealing solutions
for critical
applications
The world’s
leading sealing &
control
manufacturer
IDEX Proprietary & Confidential 34
IDEX Sealing Solutions Span a Wide Range of Mission Critical Applications
Oil and Gas
IDEX Proprietary & Confidential 35 35
PPE–Acquired
by IDEX Corporation
2010
PPE – Manufacturing Facility
opens in Brenham, TX, US
2014
Novotema – Acquired
by IDEX Corporation
2015
SFC – Acquired
by IDEX Corporation
2016
PPE–New offices open
in Houston, TX, US
2013
FTL –Acquired
by IDEX Corporation
IDEX Journey in Sealing Solutions and Current Global Footprint
Delivering highly
engineered
applications that
solve mission
critical problems
within superior
niche markets
Precision Polymer Engineering
Blackburn, Lancashire, UK
FTL Technology
Leeds, Yorkshire, UK
Novotema S.p.A
Villongo, Bergamo, Italy
PPE & FTL Manufacturing, R&D and Application Engineering
Novotema S.p.A Manufacturing, Tool Design and Development
PPE LLC Texas Manufacturing Center
SFC Koenig AG
Sales Offices
Sales and Applications Engineering Specialists
Main Dealers/Distributors/Agents
PPE LLC
Texas Manufacturing Center
Brenham, TX, US
SFC Koenig AG
Dietikon
Switzerland
IDEX Proprietary & Confidential
Global Sealing Market Deep Dive
36
Mechanical Seals
Elastomer Seals
Engineered Plastic Seals
Metallic Gaskets & Seals
Non–Metallic Gaskets & Seals
Other Seals
$3,290M
Main Application Areas
Oil & gas exploration and production, semiconductors, safety critical
sealing applications, pumps & valves for extreme environments and
applications, marine diesel engines, scientific instrumentation
$150m
$300m
$100m
$500m
$1,020m
High Performance Sealing (12%)
Total Global
Seals &
Gaskets
Market
$28.5B
$25.2B
$3.3B
$1,230m
Novotema
PPE
SFC
FTL
36
IDEX Proprietary & Confidential 37
IDEX Model
IDEX Proprietary & Confidential
Marine Diesel & Gas Engines Example
Innovation
• Environmental legislation (IMO) needs to be adhered to for engine emissions
• This drives requirement for dual fuel and alternative fuel capability
• PPE created a specifically designed material for multi–fuel operation meeting
IMO regulations and exceeding 25,000 hours continuous operation
38
IDEX Proprietary & Confidential
Pharmaceutical Innovation example
Innovation
• With Steam in Place requirements for Bio–Pharma applications, existing
material technology was limited
• A new material has been developed in accordance with FDA and USP Class VI
requirements
• Custom designed profile in new material allowing valve OEM to offer unique
valve design to bio–pharma applications
39
IDEX Proprietary & Confidential
Semiconductor Example
PPE
Semiconductor
Sales and
Elastomer
Market
We are growing
faster than the
average market
growth
CAGR 2015-2020
by Application
Within
semiconductor we
are focused on
the highest growth
applications,
laying the
foundation for
further
accelerated
growth
Semiconductor
High
Performance
Seal Market
Forecast
We have a
developed a solid
position at all
major
Semiconductor
OEM’s and Wafer
Manufacturers
40
2016 2020
G
ro
w
th
IDEX Proprietary & Confidential
Organic Growth – Texas Investment
Ground-breaking 2nd April 2014 Production 17th November 2014
• IDEX has invested in manufacturing capability in Texas to capture
US growth
• This investment creates the organic growth capability to double our
US revenue over 3 years
41
IDEX Proprietary & Confidential 42
Current product portfolio of SFC mainly comprises expander sealing solutions
• Check valves are new products
SFC product portfolio
Latest Acquisition – SFC KOENIG
Sealing
Solutions
Flow
control
Installation
Push–type expanders: Sealing solutions for medium / high pressure
applications up to 450 bar
Pull–type expanders: Sealing solutions including for thin wall structures
across all pressure ranges up to 500 bar
Low-Pressure Plugs: Sealing solutions for low pressure applications and
complex geometries up to 60 bar
Restrictors: Provides precise pressure regulation and orifice flow control
up to 200 bar
Check valves: Allows flow at a certain pressure and prevents backflow
within a circuit fluid. Market launch in late 2015.
Hydraulic & Pneumatic Tools: For use in installation of expanders and
flow control solutions
IDEX Proprietary & Confidential
Latest Acquisition – SFC KOENIG
SFC serves automotive (PC,CV) hydraulics markets, with newer entry into
medical and aerospace business
Passenger
Cars (PC)
Passenger cars and light commercial
OEM units below 6 tons
Application of expanders: primarily in powertrains
(e.g. engine, transmission)
Medium &
Heavy–Duty
(MHD)
Trucks and buses above 6 tons
Application of expanders: primarily used in the
powertrains
Hydraulic
systems
(HYD)
Applications used in areas like agriculture and
construction in hydraulic components; pumps and
motors etc.
Medical/
Aerospace &
other new
markets
Medical: Equipment for e.g., diagnostics, dental
equipment, and surgical devices.
Aerospace: Passenger planes and cargo planes.
43
Double Digit growth over the coming 5 years
IDEX Proprietary & Confidential 44
Inorganic Growth Options
• IDEX Sealing Solutions has been growing significantly over the last years with 4 acquisitions and
one major facility expansion.
• Further M&A opportunities exist in three key areas:
M&A FUNNEL
Enhanced
Elastomer
Offering
PLATFORM
Enhanced
Product
Offering
Geographical Expansion
Reinforcing
the Foundation
Adjacency
APAC Manufacturing Set–Up
44
IDEX Proprietary & Confidential
Key Take–Aways IDEX Sealing Solutions
• IDEX has developed this platform in 6 years from no presence to a
global organization consisting of 7 sites and approximately 700
employees, with above IDEX average profitability. This growth has
been accelerating over the last 2 years.
• IDEX Sealing Solutions offers significant further organic and inorganic
growth potential because of the niches we are in. This is further
accelerated by the SFC KOENIG addition.
• We will continue to look at further expansion of this platform, since we
believe that the High End Sealing market has an excellent fit with the
IDEX “Mission critical / Low % of overall equipment spend” model.
45
IDEX Proprietary & Confidential 46
IDEX Proprietary & Confidential
Q&A
47