Document


 
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: January 29, 2019
(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 January 29, 2019, IDEX Corporation (the “Company”) issued a press release announcing financial results for the period ended December 31, 2018.

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 7.01 – Regulation FD Disclosure.

Q4 2018 Presentation Slides

Presentation slides discussing IDEX Corporation’s quarterly and annual operating results are attached to this Current Report on Form 8-K as Exhibit 99.2 and are incorporated herein by reference.

The Securities and Exchange Commission encourages companies to disclose forward-looking information so that investors can better understand the future prospects of a company and make informed investment decisions. This Current Report and the Exhibits hereto may contain “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These statements may relate to, among other things, capital expenditures, acquisitions, cost reductions, cash flow, revenues, earnings, market conditions, global economies and operating improvements, and are indicated by words or phrases such as “anticipates,” “estimates,” “plans,” “expects,” “projects,” “forecasts,” “should,” “could,” “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 Current Report. 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 the Compay's results, particularly in light of the low levels of order backlogs it typically maintains; the Company's 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; developments with respect to trade policy and tariffs; 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. Additional factors that could cause actual results to differ materially from those reflected in the forward-looking statements include, but are not limited to, the risks discussed in the “Risk Factors” section included in IDEX’s most recent annual report on Form 10-K filed with the Securities and Exchange Commission (SEC) and the other risks discussed in the Company’s filings with the SEC. The forward-looking statements included in this Current Report and the Exhibits hereto are only made as of the date of this Current Report, and management undertakes no obligation to publicly update them to reflect subsequent events or circumstances, except as may be required by law. Investors are cautioned not to rely unduly on forward-looking statements when evaluating the information presented herein.

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 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 this Current Report contains is material investor information that is not otherwise publicly available.





Item 9.01 – Financial Statements and Exhibits.

(a)
Exhibits

99.1
Press release dated January 29, 2019 announcing IDEX Corporation’s quarterly and annual operating results.

99.2
Presentation slides of 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/  WILLIAM K. GROGAN

 
 
William K. Grogan
 
 
Senior Vice President and Chief Financial Officer
January 30, 2019
 
 






EXHBIT INDEX

Exhibit
Number
 
Description
 
 
 
 
 



Exhibit



http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12662127&doc=4

For further information:         TRADED: NYSE (IEX)                              EX-99.1
Investor Contact:                
William K. Grogan                         
Senior Vice President and Chief Financial Officer                     
(847) 498-7070        

TUESDAY, JANUARY 29, 2019

IDEX REPORTS RECORD FOURTH QUARTER AND FULL YEAR 2018 RESULTS;
Q4 SALES UP 5 PERCENT OVERALL AND ORGANICALLY;
Q4 REPORTED EPS WAS $1.27 WITH ADJUSTED EPS OF $1.31

LAKE FOREST, IL, JANUARY 29 - IDEX Corporation (NYSE: IEX) today announced its financial results for the three- and twelve- month periods ended December 31, 2018.

Full Year 2018 Highlights
Orders were up 7 percent overall and 6 percent organically
Sales were up 9 percent overall and 8 percent organically
Reported operating margin was 22.9 percent with adjusted operating margin of 23.4 percent, up 150 bps
Reported EPS was $5.29 with adjusted EPS of $5.41, up 26 percent
Repurchased 1.3 million shares of common stock for $174 million
Acquired Finger Lakes Instrumentation and the intellectual property assets of Phantom Controls

Full Year 2018

Orders of $2.5 billion were up 7 percent compared with the prior year (+6 percent organic and +1 percent foreign currency translation).

Sales of $2.5 billion were up 9 percent compared with the prior year (+8 percent organic and +1 percent foreign currency translation).
  
Gross margin of 45.0 percent was up 10 basis points compared with the prior year primarily due to productivity initiatives and volume leverage, partially offset by higher engineering costs.

Operating income of $569.1 million resulted in an operating margin of 22.9 percent. Excluding $12.1 million of restructuring expenses, adjusted operating income was $581.2 million with an adjusted operating margin of 23.4 percent, up 150 basis points from the prior year mainly due to volume leverage. Adjusted operating income drove adjusted EBITDA of $662.7 million which was 27 percent of sales and covered interest expense by 15 times.

Provision for income taxes of $118.4 million resulted in an effective tax rate (ETR) of 22.4 percent and included the tax impact from restructuring expenses. Excluding the tax impact from restructuring expenses, provision for income taxes was $121.4 million which resulted in an adjusted ETR of 22.4 percent.

Net income was $410.6 million which resulted in EPS of $5.29. Excluding restructuring expenses, adjusted EPS of $5.41 increased $1.10, or 26 percent, from prior year adjusted EPS.

Cash from operations of $479.3 million was up 11 percent from the prior year and led to free cash flow of $423.3 million, which was up 9 percent from the prior year and 101 percent of adjusted net income primarily due to working capital and capital expenditure investments to support long-term growth.






Fourth Quarter 2018

Orders of $610.3 million were up 1 percent compared with the prior year period (+2 percent organic and -1 percent foreign currency translation).

Sales of $614.1 million were up 5 percent compared with the prior year period (+5 percent organic, +1 percent acquisition/divestitures and -1 percent foreign currency translation).
  
Gross margin of 44.6 percent was up 10 basis points compared with the prior year period primarily due to productivity initiatives and volume leverage, partially offset by higher engineering costs.

Operating income of $139.4 million resulted in an operating margin of 22.7 percent. Excluding $3.8 million of restructuring expenses, adjusted operating income was $143.2 million with an adjusted operating margin of 23.3 percent, up 120 basis points from the prior year period mainly due to volume leverage. Adjusted operating income drove adjusted EBITDA of $162.0 million which was 26 percent of sales and covered interest expense by almost 15 times.

Provision for income taxes of $30.7 million resulted in an ETR of 23.8 percent and included the tax impact from restructuring expenses. Excluding the tax impact from restructuring expenses, provision for income taxes was $31.7 million which resulted in an adjusted ETR of 23.9 percent.

Net income was $98.1 million which resulted in EPS of $1.27. Excluding restructuring expenses, adjusted EPS of $1.31 increased 19 cents, or 17 percent, from the prior year period adjusted EPS.

Cash from operations of $153.6 million was up 13 percent from the prior year period and led to free cash flow of $137.4 million, which was up 14 percent from the prior year period and 136 percent of adjusted net income.

The Company repurchased 917 thousand shares of common stock for $122 million in the fourth quarter of 2018.





“Strong demand in the industrial market coupled with solid execution drove a second consecutive record year for IDEX. We delivered annual all-time highs in orders, sales, operating income, operating margin, EPS and free cash flow. Annual organic order and sales growth were 6 and 8 percent, respectively. The 8 percent annual organic sales growth was our highest annual rate in 7 years. I'm very impressed with these growth rates, and I am especially encouraged with the diversity of the growth across all segments. FMT's annual organic revenue growth was 9 percent, FSDP delivered 7 percent and HST achieved 6 percent. Adjusted operating margin increased 150 basis points with robust expansion across each of the segments and we achieved record adjusted EPS of $5.41, up 26 percent from the prior year. Overall, I am extremely pleased with our team’s performance in 2018.

 
 
We continue to invest in our best organic growth opportunities as evidenced by the record capital expenditures of $56 million in 2018. M&A remains a key priority, we continue to work our solid funnel, and we will remain committed to our disciplined approach to capital deployment. In 2018, we deployed $174 million on stock repurchases, with $122 million occurring in the fourth quarter. We also returned $127 million to our shareholders via dividends in 2018, achieving our goal of distributing over 30 percent of earnings back to our shareholders.

 
 
Looking forward to 2019, although trade tensions persist and the geopolitical environment remains uncertain, we are confident in our outlook given our market leading positions in our diversified portfolio and our track record of strong execution in volatile times. Consistent with our long-term strategic objective to grow faster than underlying market growth, we are projecting 4 to 5 percent organic revenue growth in 2019. Full year 2019 EPS is expected to be in the range of $5.60 to $5.80 with first quarter EPS in the range of $1.35 to $1.38, which include approximately 15 cents and 6 cents of foreign currency headwind, respectively."

 
 
 
Andrew K. Silvernail
 
Chairman and Chief Executive Officer


Fourth Quarter 2018 Segment Highlights

Fluid & Metering Technologies
Sales of $237.2 million reflected a 7 percent increase compared to the fourth quarter of 2017 (+8 percent organic and -1 percent foreign currency translation).
Operating income of $67.9 million resulted in an operating margin of 28.6 percent. Excluding $1.1 million of restructuring expenses, adjusted operating income was $69.0 million with an adjusted operating margin of 29.1 percent, a 70 basis point increase compared to the prior year period primarily due to higher volume and productivity initiatives.
EBITDA of $73.1 million resulted in an EBITDA margin of 30.8 percent. Excluding $1.1 million of restructuring expenses, adjusted EBITDA of $74.2 million resulted in an adjusted EBITDA margin of 31.3 percent, a 50 basis point increase compared to the prior year period.

Health & Science Technologies
Sales of $225.5 million reflected an 8 percent increase compared to the fourth quarter of 2017 (+7 percent organic, +2 percent acquisition and -1 percent foreign currency translation).
Operating income of $52.2 million resulted in an operating margin of 23.1 percent. Excluding $0.6 million of restructuring expenses, adjusted operating income was $52.8 million with an adjusted operating margin of 23.4 percent, a 110 basis point increase compared to the prior year period primarily due to higher volume and productivity initiatives, partially offset by higher engineering costs.
EBITDA of $62.2 million resulted in an EBITDA margin of 27.6 percent. Excluding $0.6 million of restructuring expenses, adjusted EBITDA of $62.8 million resulted in an adjusted EBITDA margin of 27.8 percent, a 10 basis point decrease compared to the prior year period.

Fire & Safety/Diversified Products
Sales of $151.7 million reflected a 2 percent decrease compared to the fourth quarter of 2017 (-1 percent organic and -1 percent foreign currency translation).





Operating income of $38.4 million resulted in an operating margin of 25.3 percent. Excluding $1.8 million of restructuring expenses, adjusted operating income was $40.2 million with an adjusted operating margin of 26.5 percent, flat compared to the prior year period primarily due to productivity initiatives offset by lower volume.
EBITDA of $42.1 million resulted in an EBITDA margin of 27.8 percent. Excluding $1.8 million of restructuring expenses, adjusted EBITDA of $43.9 million resulted in an adjusted EBITDA margin of 28.9 percent, a 30 basis point increase compared to the prior year period.

For the fourth quarter of 2018, Fluid & Metering Technologies contributed 39 percent of sales, 43 percent of operating income and 41 percent of EBITDA; Health & Science Technologies accounted for 37 percent of sales, 33 percent of operating income and 35 percent of EBITDA; and Fire & Safety/Diversified Products represented 24 percent of sales, 24 percent of operating income and 24 percent of EBITDA.

Corporate Costs
Corporate costs decreased to $18.7 million in the fourth quarter of 2018 from $21.2 million in the fourth quarter of 2017 as a result of lower outside consulting costs.

Corporate costs increased to $78.7 million in 2018 compared to $74.2 million in 2017 as a result of a stamp duty tax in Switzerland associated with the restructuring of intercompany loans and higher stock compensation.

Restructuring Actions
The Company recorded $3.8 million and $12.1 million of restructuring expenses in the fourth quarter and full year 2018, respectively, as part of initiatives that support the implementation of key strategic efforts designed to facilitate long-term, sustainable growth through cost reduction actions, primarily consisting of employee reductions and facility rationalization. A portion of the restructuring expenses also relates to expenses associated with the consolidation of three facilities into our Optics Center of Excellence in Rochester, New York. The consolidation of these facilities is expected to be completed by early 2019.

Non-U.S. GAAP Measures of Financial Performance
The Company supplements certain U.S. GAAP financial performance metrics with non-U.S. GAAP financial performance metrics in order to provide investors with better insight and increased transparency while also allowing for a more comprehensive understanding of the financial information used by management in its decision making. Reconciliations of non-U.S. GAAP financial performance metrics to their most comparable U.S. GAAP financial performance metrics are defined and presented below and should not be considered a substitute for, nor superior to, the financial data prepared in accordance with U.S. GAAP. There were no adjustments to U.S. GAAP financial performance metrics other than the items noted below.

Organic orders and sales are calculated excluding amounts from acquired or divested businesses during the first twelve months of ownership or divestiture and the impact of foreign currency translation.
Adjusted operating income is calculated as operating income plus restructuring expenses plus or minus the net loss or gain on sale of businesses.
Adjusted operating margin is calculated as adjusted operating income divided by net sales.
Adjusted net income is calculated as net income plus restructuring expenses plus or minus the net loss or gain on sale of businesses, net of the statutory tax expense or benefit.
EBITDA is calculated as net income plus interest expense plus provision for income taxes plus depreciation and amortization. We reconciled EBITDA to net income on a consolidated basis as we do not allocate consolidated interest expense or consolidated provision for income taxes to our segments.
Adjusted EBITDA is calculated as EBITDA plus restructuring expenses plus or minus the net loss or gain on sale of businesses.
Free cash flow is calculated as cash flow from operating activities less capital expenditures.







Table 1: Reconciliations of the Change in Net Sales to Organic Net Sales

 
For the Quarter Ended December 31, 2018
 
For the Year Ended December 31, 2018
 
FMT
 
HST
 
FSDP
 
IDEX
 
FMT
 
HST
 
FSDP
 
IDEX
Change in net sales
7
 %
 
8
 %
 
(2
)%
 
5
 %
 
8
 %
 
9
%
 
8
%
 
9
 %
 - Net impact from acquisitions/divestitures
 %
 
2
 %
 
 %
 
1
 %
 
(2
)%
 
2
%
 
%
 
 %
 - Impact from FX
(1
)%
 
(1
)%
 
(1
)%
 
(1
)%
 
1
 %
 
1
%
 
1
%
 
1
 %
Change in organic net sales
8
 %
 
7
 %
 
(1
)%
 
5
 %
 
9
 %
 
6
%
 
7
%
 
8
 %



Table 2: Reconciliations of Reported-to-Adjusted Operating Income and Margin (dollars in thousands)

 
For the Quarter Ended December 31,
 
2018
 
2017
 
FMT
 
HST
 
FSDP
 
Corporate
 
IDEX
 
FMT
 
HST
 
FSDP
 
Corporate
 
IDEX
Reported operating income (loss)
$
67,911

 
$
52,160

 
$
38,439

 
$
(19,069
)
 
$139,441
 
$
61,200

 
$
44,962

 
$
41,006

 
$
(11,920
)
 
$135,248
 + Restructuring expenses
1,145

 
606

 
1,757

 
324

 
3,832

 
1,808

 
1,668

 
182

 

 
3,658

 + Gain on sale of business

 

 

 

 

 

 

 

 
(9,273
)
 
(9,273
)
Adjusted operating income (loss)
$
69,056

 
$
52,766

 
$
40,196

 
$
(18,745
)
 
$
143,273

 
$
63,008

 
$
46,630

 
$
41,188

 
$
(21,193
)
 
$
129,633

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales (eliminations)
$
237,206

 
$
225,515

 
$
151,723

 
$
(350
)
 
$
614,094

 
$
222,052

 
$
208,916

 
$
155,504

 
$
(568
)
 
$
585,904

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reported operating margin
28.6
%
 
23.1
%
 
25.3
%
 
n/m

 
22.7
%
 
27.6
%
 
21.5
%
 
26.4
%
 
n/m

 
23.1
%
Adjusted operating margin
29.1
%
 
23.4
%
 
26.5
%
 
n/m

 
23.3
%
 
28.4
%
 
22.3
%
 
26.5
%
 
n/m

 
22.1
%


 
For the Year Ended December 31,
 
2018
 
2017
 
FMT
 
HST
 
FSDP
 
Corporate
 
IDEX
 
FMT
 
HST
 
FSDP
 
Corporate
 
IDEX
Reported operating income (loss)
$
275,060

 
$
205,679

 
$
168,601

 
$
(80,252
)
 
$569,088
 
$
241,030

 
$
179,567

 
$
147,028

 
$
(65,069
)
 
$502,556
 + Restructuring expenses
2,458

 
5,904

 
2,184

 
1,537

 
12,083

 
3,374

 
4,696

 
255

 
130

 
8,455

 + Gain on sale of business

 

 

 

 

 

 

 

 
(9,273
)
 
(9,273
)
Adjusted operating income (loss)
$
277,518

 
$
211,583

 
$
170,785

 
$
(78,715
)
 
$
581,171

 
$
244,404

 
$
184,263

 
$
147,283

 
$
(74,212
)
 
$
501,738

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales (eliminations)
$
951,552

 
$
896,419

 
$
637,028

 
$
(1,333
)
 
$
2,483,666

 
$
880,957

 
$
820,131

 
$
587,533

 
$
(1,309
)
 
$
2,287,312

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reported operating margin
28.9
%
 
22.9
%
 
26.5
%
 
n/m

 
22.9
%
 
27.4
%
 
21.9
%
 
25.0
%
 
n/m

 
22.0
%
Adjusted operating margin
29.2
%
 
23.6
%
 
26.8
%
 
n/m

 
23.4
%
 
27.7
%
 
22.5
%
 
25.1
%
 
n/m

 
21.9
%







Table 3: Reconciliations of Reported-to-Adjusted Net Income and EPS (in thousands, except EPS)

 
For the Quarter Ended December 31,
 
For the Year Ended December 31,
 
2018
 
2017
 
2018
 
2017
Reported net income
$
98,137

 
$
93,746

 
$
410,573

 
$
337,257

 + Restructuring expenses
3,832

 
3,658

 
12,083

 
8,455

 + Tax impact on restructuring expenses
(1,029
)
 
(1,243
)
 
(3,032
)
 
(2,772
)
 + Gain on sale of business

 
(9,273
)
 

 
(9,273
)
 + Tax impact on gain on sale of business

 

 

 

Adjusted net income
$
100,940

 
$
86,888

 
$
419,624

 
$
333,667


 
For the Quarter Ended December 31,
 
For the Year Ended December 31,
 
2018
 
2017
 
2018
 
2017
Reported EPS
$
1.27

 
$
1.21

 
$
5.29

 
$
4.36

 + Restructuring expenses
0.05

 
0.05

 
0.16

 
0.11

 + Tax impact on restructuring expenses
(0.01
)
 
(0.02
)
 
(0.04
)
 
(0.04
)
 + Gain on sale of business

 
(0.12
)
 

 
(0.12
)
 + Tax impact on gain on sale of business

 

 

 

Adjusted EPS
$
1.31

 
$
1.12

 
$
5.41

 
$
4.31

 
 
 
 
 
 
 
 
Diluted weighted average shares
77,100

 
77,597

 
77,563

 
77,333



Table 4: Reconciliations of EBITDA to Net Income (dollars in thousands)

 
For the Quarter Ended December 31,
 
2018
 
2017
 
FMT
 
HST
 
FSDP
 
Corporate
 
IDEX
 
FMT
 
HST
 
FSDP
 
Corporate
 
IDEX
Reported operating income (loss)
$
67,911

 
$
52,160

 
$
38,439

 
$
(19,069
)
 
$
139,441

 
$
61,200

 
$
44,962

 
$
41,006

 
$
(11,920
)
 
$
135,248

 - Other (income) expense - net
295

 
(912
)
 
(120
)
 
317

 
(420
)
 
300

 
(892
)
 
296

 
973

 
677

 + Depreciation and amortization
5,469

 
9,079

 
3,581

 
185

 
18,314

 
5,764

 
10,840

 
3,603

 
203

 
20,410

EBITDA
73,085

 
62,151

 
42,140

 
(19,201
)
 
158,175

 
66,664

 
56,694

 
44,313

 
(12,690
)
 
154,981

 - Interest expense
 
 
 
 
 
 
 
 
11,036

 
 
 
 
 
 
 
 
 
10,969

 - Provision for income taxes
 
 
 
 
 
 
 
 
30,688

 
 
 
 
 
 
 
 
 
29,856

 - Depreciation and amortization
 
 
 
 
 
 
 
 
18,314

 
 
 
 
 
 
 
 
 
20,410

Reported net income
 
 
 
 
 
 
 
 
$
98,137

 
 
 
 
 
 
 
 
 
$
93,746

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales (eliminations)
$
237,206

 
$
225,515

 
$
151,723

 
$
(350
)
 
$
614,094

 
$
222,052

 
$
208,916

 
$
155,504

 
$
(568
)
 
$
585,904

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reported operating margin
28.6
%
 
23.1
%
 
25.3
%
 
n/m

 
22.7
%
 
27.6
%
 
21.5
%
 
26.4
%
 
n/m

 
23.1
%
EBITDA margin
30.8
%
 
27.6
%
 
27.8
%
 
n/m

 
25.8
%
 
30.0
%
 
27.1
%
 
28.5
%
 
n/m

 
26.5
%






 
For the Year Ended December 31,
 
2018
 
2017
 
FMT
 
HST
 
FSDP
 
Corporate
 
IDEX
 
FMT
 
HST
 
FSDP
 
Corporate
 
IDEX
Reported operating income (loss)
$
275,060

 
$
205,679

 
$
168,601

 
$
(80,252
)
 
$
569,088

 
$
241,030

 
$
179,567

 
$
147,028

 
$
(65,069
)
 
$
502,556

 - Other (income) expense - net
1,351

 
(1,192
)
 
(3,444
)
 
(700
)
 
(3,985
)
 
1,007

 
(795
)
 
1,959

 
223

 
2,394

 + Depreciation and amortization
22,370

 
39,939

 
14,493

 
742

 
77,544

 
23,587

 
45,287

 
14,541

 
801

 
84,216

EBITDA
296,079

 
246,810

 
186,538

 
(78,810
)
 
650,617

 
263,610

 
225,649

 
159,610

 
(64,491
)
 
584,378

 - Interest expense
 
 
 
 
 
 
 
 
44,134

 
 
 
 
 
 
 
 
 
44,889

 - Provision for income taxes
 
 
 
 
 
 
 
 
118,366

 
 
 
 
 
 
 
 
 
118,016

 - Depreciation and amortization
 
 
 
 
 
 
 
 
77,544

 
 
 
 
 
 
 
 
 
84,216

Reported net income
 
 
 
 
 
 
 
 
$410,573
 
 
 
 
 
 
 
 
 
$337,257
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales (eliminations)
$
951,552

 
$
896,419

 
$
637,028

 
$
(1,333
)
 
$
2,483,666

 
$
880,957

 
$
820,131

 
$
587,533

 
$
(1,309
)
 
$
2,287,312

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reported operating margin
28.9
%
 
22.9
%
 
26.5
%
 
n/m

 
22.9
%
 
27.4
%
 
21.9
%
 
25.0
%
 
n/m

 
22.0
%
EBITDA margin
31.1
%
 
27.5
%
 
29.3
%
 
n/m

 
26.2
%
 
29.9
%
 
27.5
%
 
27.2
%
 
n/m

 
25.5
%

Table 5: Reconciliations of EBITDA to Adjusted EBITDA (dollars in thousands)

 
For the Quarter Ended December 31,
 
2018
 
2017
 
FMT
 
HST
 
FSDP
 
Corporate
 
IDEX
 
FMT
 
HST
 
FSDP
 
Corporate
 
IDEX
EBITDA
$
73,085

 
$
62,151

 
$
42,140

 
$
(19,201
)
 
$
158,175

 
$
66,664

 
$
56,694

 
$
44,313

 
$
(12,690
)
 
$
154,981

 + Restructuring expenses
1,145

 
606

 
1,757

 
324

 
3,832

 
1,808

 
1,668

 
182

 

 
3,658

 + Gain on sale of business

 

 

 

 

 

 

 

 
(9,273
)
 
(9,273
)
Adjusted EBITDA
$
74,230

 
$
62,757

 
$
43,897

 
$
(18,877
)
 
$
162,007

 
$
68,472

 
$
58,362

 
$
44,495

 
$
(21,963
)
 
$
149,366

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA margin
31.3
%
 
27.8
%
 
28.9
%
 
n/m

 
26.4
%
 
30.8
%
 
27.9
%
 
28.6
%
 
n/m

 
25.5
%

 
For the Year Ended December 31,
 
2018
 
2017
 
FMT
 
HST
 
FSDP
 
Corporate
 
IDEX
 
FMT
 
HST
 
FSDP
 
Corporate
 
IDEX
EBITDA
$
296,079

 
$
246,810

 
$
186,538

 
$
(78,810
)
 
$
650,617

 
$
263,610

 
$
225,649

 
$
159,610

 
$
(64,491
)
 
$
584,378

 + Restructuring expenses
2,458

 
5,904

 
2,184

 
1,537

 
12,083

 
3,374

 
4,696

 
255

 
130

 
8,455

 + Gain on sale of business

 

 

 

 

 

 

 

 
(9,273
)
 
(9,273
)
Adjusted EBITDA
$
298,537

 
$
252,714

 
$
188,722

 
$
(77,273
)
 
$
662,700

 
$
266,984

 
$
230,345

 
$
159,865

 
$
(73,634
)
 
$
583,560

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA margin
31.4
%
 
28.2
%
 
29.6
%
 
n/m

 
26.7
%
 
30.3
%
 
28.1
%
 
27.2
%
 
n/m

 
25.5
%

Table 6: Reconciliations of Free Cash Flow (in thousands)
 
For the Quarter Ended
 
For the Year Ended December 31,
 
December 31,
 
September 30,
 
 
2018
 
2017
 
2018
 
2018
 
2017
Cash flow from operating activities
$
153,592

 
$
136,173

 
$
133,327

 
$
479,345

 
$
432,753

 - Capital expenditures
16,233

 
15,804

 
18,888

 
56,089

 
43,858

Free cash flow
$
137,359

 
$
120,369

 
$
114,439

 
$
423,256

 
$
388,895






 
 
 
 
 
 
 
 
 
 
 
 

Conference Call to be Broadcast over the Internet
IDEX will broadcast its fourth quarter earnings conference call over the Internet on Wednesday, January 30, 2019 at 9:30 a.m. CT. Chairman and Chief Executive Officer Andy Silvernail and Senior Vice President and Chief Financial Officer William Grogan 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 #13684161.


Forward-Looking Statements
This news release contains “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These statements may relate to, among other things, capital expenditures, acquisitions, cost reductions, cash flow, revenues, earnings, market conditions, global economies and operating improvements, and are indicated by words or phrases such as “anticipates,” “estimates,” “plans,” “expects,” “projects,” “forecasts,” “should,” “could,” “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 the Company's results, particularly in light of the low levels of order backlogs it typically maintains; the Company's 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; developments with respect to trade policy and tariffs; 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. Additional factors that could cause actual results to differ materially from those reflected in the forward-looking statements include, but are not limited to, the risks discussed in the “Risk Factors” section included in the Company’s most recent annual report on Form 10-K filed with the SEC and the other risks discussed in the Company’s filings with the SEC. 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, except as may be required by law. Investors are cautioned not to rely unduly on forward-looking statements when evaluating the information presented here.


About IDEX
IDEX is a global fluidics leader serving high growth specialized markets. We are best known for our expertise in highly engineered fluidics systems and components, as well as for our expertise in fire and safety products including the Jaws of Life® family of rescue and recovery tools. Our products touch lives every day. Whether it’s a life-saving rescue operation, dispensing fresh juice to a first grader or fueling aircraft, IDEX is a leader in creating enabling technology used in many of the most common everyday activities. For more information, please visit www.idexcorp.com. IDEX shares are traded on the New York Stock Exchange under the symbol “IEX”.
 
(Financial reports follow)





IDEX CORPORATION
Condensed Consolidated Statements of Operations
(in thousands except for per share amounts)
(unaudited)
 
For the Quarter Ended December 31,
 
For the Year Ended December 31,
 
2018
 
2017
 
2018
 
2017
Net sales
$
614,094

 
$
585,904

 
$
2,483,666

 
$
2,287,312

Cost of sales
340,451

 
325,022

 
1,365,771

 
1,260,634

Gross profit
273,643

 
260,882

 
1,117,895

 
1,026,678

Selling, general and administrative expenses
130,370

 
131,249

 
536,724

 
524,940

Gain on sale of business

 
(9,273
)
 

 
(9,273
)
Restructuring expenses
3,832

 
3,658

 
12,083

 
8,455

Operating income
139,441

 
135,248

 
569,088

 
502,556

Other (income) expense - net
(420
)
 
677

 
(3,985
)
 
2,394

Interest expense
11,036

 
10,969

 
44,134

 
44,889

Income before income taxes
128,825

 
123,602

 
528,939

 
455,273

Provision for income taxes
30,688

 
29,856

 
118,366

 
118,016

Net income
$
98,137

 
$
93,746

 
$
410,573

 
$
337,257

 
 
 
 
 
 
 
 
Earnings per Common Share:
 
 
 
 
 
 
 
Basic earnings per common share
$
1.29

 
$
1.23

 
$
5.36

 
$
4.41

Diluted earnings per common share
$
1.27

 
$
1.21

 
$
5.29

 
$
4.36

 
 
 
 
 
 
 
 
Share Data:
 
 
 
 
 
 
 
Basic weighted average common shares outstanding
76,128

 
76,283

 
76,412

 
76,232

Diluted weighted average common shares outstanding
77,100

 
77,597

 
77,563

 
77,333







IDEX CORPORATION
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)

 
December 31, 2018
 
December 31, 2017
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
466,407

 
$
375,950

Receivables - net
314,753

 
294,166

Inventories
279,995

 
259,724

Other current assets
31,377

 
74,203

Total current assets
1,092,532

 
1,004,043

Property, plant and equipment - net
281,220

 
258,350

Goodwill and intangible assets
2,081,282

 
2,118,904

Other noncurrent assets
15,765

 
18,331

Total assets
$
3,470,799

 
$
3,399,628

 
 
 
 
Liabilities and shareholders' equity
 
 
 
Current liabilities
 
 
 
Trade accounts payable
$
143,196

 
$
147,067

Accrued expenses
187,536

 
184,705

Short-term borrowings
483

 
258

Dividends payable
33,446

 
28,945

Total current liabilities
364,661

 
360,975

Long-term borrowings
848,335

 
858,788

Other noncurrent liabilities
264,627

 
293,323

Total liabilities
1,477,623

 
1,513,086

Shareholders' equity
1,993,176

 
1,886,542

Total liabilities and shareholders' equity
$
3,470,799

 
$
3,399,628







IDEX CORPORATION
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
For the Year Ended December 31,
 
2018
 
2017
Cash flows from operating activities
 
 
 
Net income
$
410,573

 
$
337,257

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Loss on sale of fixed assets - net
946

 
315

Gain on sale of business

 
(9,273
)
Depreciation and amortization
39,049

 
38,314

Amortization of intangible assets
38,495

 
45,902

Amortization of debt issuance expenses
1,332

 
1,320

Share-based compensation expense
24,754

 
24,405

Deferred income taxes
(4,346
)
 
(33,742
)
Non-cash interest expense associated with forward starting swaps
6,475

 
6,655

Changes in (net of the effect from acquisitions and divestitures):
 
 
 
Receivables
(26,063
)
 
(15,803
)
Inventories
(23,031
)
 
760

Other current assets
27,806

 
(20,031
)
Trade accounts payable
(1,220
)
 
12,556

Accrued expenses
4,148

 
19,710

Other - net
(19,573
)
 
24,408

Net cash flows provided by operating activities
479,345

 
432,753

Cash flows from investing activities
 
 
 
Purchases of property, plant and equipment
(56,089
)
 
(43,858
)
Purchase of intellectual property
(4,000
)
 

Acquisition of businesses, net of cash acquired
(20,205
)
 
(38,161
)
Proceeds from sale of business

 
21,795

Proceeds from fixed asset disposals
363

 
6,011

Other - net
(1,500
)
 
(533
)
Net cash flows used in investing activities
(81,431
)
 
(54,746
)
Cash flows from financing activities
 
 
 
Borrowings under revolving credit facilities

 
33,000

Payments under revolving credit facilities
(11,284
)
 
(200,618
)
Dividends paid
(127,478
)
 
(111,172
)
Proceeds from stock option exercises
27,639

 
22,935

Purchases of common stock
(173,926
)
 
(29,074
)
Shares surrendered for tax withholding
(11,555
)
 
(6,228
)
Settlement of foreign exchange contracts
6,593

 
13,736

Net cash flows used in financing activities
(290,011
)
 
(277,421
)
Effect of exchange rate changes on cash and cash equivalents
(17,446
)
 
39,400

Net increase in cash
90,457

 
139,986

Cash and cash equivalents at beginning of year
375,950

 
235,964

Cash and cash equivalents at end of period
$
466,407

 
$
375,950







IDEX CORPORATION
Company and Segment Financial Information - Reported
(dollars in thousands)
(unaudited)
 
 
For the Quarter Ended December 31, (a)
 
For the Year Ended December 31, (a)
 
 
2018
 
2017
 
2018
 
2017
 
Fluid & Metering Technologies
 
 
 
 
 
 
 
 
Net sales
$
237,206

 
$
222,052

 
$
951,552

 
$
880,957

 
Operating income (b)
67,911

 
61,200

 
275,060

 
241,030

 
Operating margin
28.6
%
 
27.6
%
 
28.9
%
 
27.4
%
 
EBITDA
$
73,085

 
$
66,664

 
$
296,079

 
$
263,610

 
EBITDA margin
30.8
%
 
30.0
%
 
31.1
%
 
29.9
%
 
Depreciation and amortization
$
5,469

 
$
5,764

 
$
22,370

 
$
23,587

 
Capital expenditures
4,399

 
6,059

 
19,541

 
18,218

 
 
 
 
 
 
 
 
 
 
Health & Science Technologies
 
 
 
 
 
 
 
 
Net sales
$
225,515

 
$
208,916

 
$
896,419

 
$
820,131

 
Operating income (b)
52,160

 
44,962

 
205,679

 
179,567

 
Operating margin
23.1
%
 
21.5
%
 
22.9
%
 
21.9
%
 
EBITDA
$
62,151

 
$
56,694

 
$
246,810

 
$
225,649

 
EBITDA margin
27.6
%
 
27.1
%
 
27.5
%
 
27.5
%
 
Depreciation and amortization
$
9,079

 
$
10,840

 
$
39,939

 
$
45,287

 
Capital expenditures
8,743

 
4,851

 
26,039

 
16,340

 
 
 
 
 
 
 
 
 
 
Fire & Safety/Diversified Products
 
 
 
 
 
 
 
 
Net sales
$
151,723

 
$
155,504

 
$
637,028

 
$
587,533

 
Operating income (b)
38,439

 
41,006

 
168,601

 
147,028

 
Operating margin
25.3
%
 
26.4
%
 
26.5
%
 
25.0
%
 
EBITDA
$
42,140

 
$
44,313

 
$
186,538

 
$
159,610

 
EBITDA margin
27.8
%
 
28.5
%
 
29.3
%
 
27.2
%
 
Depreciation and amortization
$
3,581

 
$
3,603

 
$
14,493

 
$
14,541

 
Capital expenditures
3,086

 
2,185

 
10,318

 
6,363

 
 
 
 
 
 
 
 
 
 
Corporate Office and Eliminations
 
 
 
 
 
 
 
 
Intersegment sales eliminations
$
(350
)
 
$
(568
)
 
$
(1,333
)
 
$
(1,309
)
 
Operating income (b)
(19,069
)
 
(11,920
)
 
(80,252
)
 
(65,069
)
 
EBITDA
(19,201
)
 
(12,690
)
 
(78,810
)
 
(64,491
)
 
Depreciation and amortization
185

 
203

 
742

 
801

 
Capital expenditures
5

 
2,709

 
191

 
2,937

 
 
 
 
 
 
 
 
 
 
Company
 
 
 
 
 
 
 
 
Net sales
$
614,094

 
$
585,904

 
$
2,483,666

 
$
2,287,312

 
Operating income
139,441

 
135,248

 
569,088

 
502,556

 
Operating margin
22.7
%
 
23.1
%
 
22.9
%
 
22.0
%
 
EBITDA
$
158,175

 
$
154,981

 
$
650,617

 
$
584,378

 
EBITDA margin
25.8
%
 
26.5
%
 
26.2
%
 
25.5
%
 
Depreciation and amortization (c)
$
18,314

 
$
20,410

 
$
77,544

 
$
84,216

 
Capital expenditures
16,233

 
15,804

 
56,089

 
43,858






IDEX CORPORATION
Company and Segment Financial Information - Adjusted
(dollars in thousands)
(unaudited)
 
 
For the Quarter Ended December 31, (a)
 
For the Year Ended December 31, (a)
 
 
2018
 
2017
 
2018
 
2017
 
Fluid & Metering Technologies
 
 
 
 
 
 
 
 
Net sales
$
237,206

 
$
222,052

 
$
951,552

 
$
880,957

 
Adjusted operating income (b)
69,056

 
63,008

 
277,518

 
244,404

 
Adjusted operating margin
29.1
%
 
28.4
%
 
29.2
%
 
27.7
%
 
Adjusted EBITDA
$
74,230

 
$
68,472

 
$
298,537

 
$
266,984

 
Adjusted EBITDA margin
31.3
%
 
30.8
%
 
31.4
%
 
30.3
%
 
Depreciation and amortization
$
5,469

 
$
5,764

 
$
22,370

 
$
23,587

 
Capital expenditures
4,399

 
6,059

 
19,541

 
18,218

 
 
 
 
 
 
 
 
 
 
Health & Science Technologies
 
 
 
 
 
 
 
 
Net sales
$
225,515

 
$
208,916

 
$
896,419

 
$
820,131

 
Adjusted operating income (b)
52,766

 
46,630

 
211,583

 
184,263

 
Adjusted operating margin
23.4
%
 
22.3
%
 
23.6
%
 
22.5
%
 
Adjusted EBITDA
$
62,757

 
$
58,362

 
$
252,714

 
$
230,345

 
Adjusted EBITDA margin
27.8
%
 
27.9
%
 
28.2
%
 
28.1
%
 
Depreciation and amortization
$
9,079

 
$
10,840

 
$
39,939

 
$
45,287

 
Capital expenditures
8,743

 
4,851

 
26,039

 
16,340

 
 
 
 
 
 
 
 
 
 
Fire & Safety/Diversified Products
 
 
 
 
 
 
 
 
Net sales
$
151,723

 
$
155,504

 
$
637,028

 
$
587,533

 
Adjusted operating income (b)
40,196

 
41,188

 
170,785

 
147,283

 
Adjusted operating margin
26.5
%
 
26.5
%
 
26.8
%
 
25.1
%
 
Adjusted EBITDA
$
43,897

 
$
44,495

 
$
188,722

 
$
159,865

 
Adjusted EBITDA margin
28.9
%
 
28.6
%
 
29.6
%
 
27.2
%
 
Depreciation and amortization
$
3,581

 
$
3,603

 
$
14,493

 
$
14,541

 
Capital expenditures
3,086

 
2,185

 
10,318

 
6,363

 
 
 
 
 
 
 
 
 
 
Corporate Office and Eliminations
 
 
 
 
 
 
 
 
Intersegment sales eliminations
$
(350
)
 
$
(568
)
 
$
(1,333
)
 
$
(1,309
)
 
Adjusted operating income (b)
(18,745
)
 
(21,193
)
 
(78,715
)
 
(74,212
)
 
Adjusted EBITDA
(18,877
)
 
(21,963
)
 
(77,273
)
 
(73,634
)
 
Depreciation and amortization
185

 
203

 
742

 
801

 
Capital expenditures
5

 
2,709

 
191

 
2,937

 
 
 
 
 
 
 
 
 
 
Company
 
 
 
 
 
 
 
 
Net sales
$
614,094

 
$
585,904

 
$
2,483,666

 
$
2,287,312

 
Adjusted operating income 
143,273

 
129,633

 
581,171

 
501,738

 
Adjusted operating margin
23.3
%
 
22.1
%
 
23.4
%
 
21.9
%
 
Adjusted EBITDA
$
162,007

 
$
149,366

 
$
662,700

 
$
583,560

 
Adjusted EBITDA margin
26.4
%
 
25.5
%
 
26.7
%
 
25.5
%
 
Depreciation and amortization (c)
$
18,314

 
$
20,410

 
$
77,544

 
$
84,216

 
Capital expenditures
16,233

 
15,804

 
56,089

 
43,858

 
 
 
 
 
 
 
 
 
(a)
Three and twelve months data include the results of Finger Lakes Instrumentation (July 2018) and thinXXS (December 2017) in the Health & Science Technologies segment from the date of acquisition and the results of Faure Herman (October 2017) in the Fluid & Metering Technologies segment through the date of disposition.
(b)
Segment operating income excludes unallocated corporate operating expenses which are included in Corporate Office and Eliminations.
(c)
Depreciation and amortization excludes amortization of debt issuance costs.


q418slidesonlyfinal
Fourth Quarter & Full Year 2018 Earnings January 30, 2019 IDEX Proprietary & Confidential


 
AGENDA • IDEX’s Overview and Outlook • Q4 & 2018 Financial Performance • Segment Performance • Fluid & Metering Technologies • Health & Science Technologies • Fire & Safety / Diversified Products • 2019 Guidance • Bridge • Summary • Q&A Brand names shown in this presentation are registered trademarks of IDEX Corporation and/or its subsidiaries IDEX Proprietary & Confidential 1


 
Replay Information • Dial toll–free: 877.660.6853 • International: 201.612.7415 • Conference ID: #13684161 • Log on to: www.idexcorp.com Brand names shown in this presentation are registered trademarks of IDEX Corporation and/or its subsidiaries IDEX Proprietary & Confidential 2


 
Cautionary Statement Under the Private Securities Litigation Reform Act; Non-GAAP Measures This presentation and discussion will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These statements may relate to, among other things, capital expenditures, acquisitions, cost reductions, cash flow, revenues, earnings, market conditions, global economies and operating improvements, and are indicated by words or phrases such as “anticipates,” “estimates,” “plans,” “expects,” “projects,” “forecasts,” “should,” “could,” “will,” “management believes,” “the company believes,” &#