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: February 3, 2021
(Date of earliest event reported)
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction | (Commission File Number) | (IRS Employer | ||||||||||||
| of incorporation) | Identification No.) | |||||||||||||
(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)) | |||||
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| Emerging growth company | ||||||||||||||||||||||||||
| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ | ||||||||||||||||||||||||||
Item 2.02 – Results of Operations and Financial Condition.
On February 3, 2021 , IDEX Corporation (the “Company”) issued a press release announcing financial results for the period ended December 31, 2020.
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 2020 Presentation Slides
Presentation slides discussing IDEX Corporation’s quarterly 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, the Company’s expected organic sales growth, the expected timing and anticipated benefits of the Company’s acquisition of Abel Pumps, L.P. and certain of its affiliates, and the anticipated continuing effects of the coronavirus pandemic, including with respect to the Company's sales, improvements in the Company’s end markets, facility closures, supply chains and access to capital, 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: the duration of the coronavirus pandemic and the continuing effects of the coronavirus on our ability to operate our business and facilities, on our customers, on supply chains and on the U.S. and global economy generally; 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 and the Company's subsequent quarterly reports filed with the Securities and Exchange Commission (SEC) as well as 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 February 3, 2021 announcing IDEX Corporation’s quarterly 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 | ||||||||
| February 4, 2021 | ||||||||
EXHIBIT INDEX
| Exhibit Number | Description | |||||||
For further information: TRADED: NYSE (IEX) EX99.1
Investor Contact:
William K. Grogan
Senior Vice President and Chief Financial Officer
(847) 498-7070
WEDNESDAY, FEBRUARY 3, 2021
IDEX REPORTS FOURTH QUARTER AND FULL YEAR 2020 RESULTS
NORTHBROOK, IL, FEBRUARY 3 - IDEX Corporation (NYSE: IEX) today announced its financial results for the quarter and year ended December 31, 2020.
2020 Highlights
•Full year EPS of $4.94; adjusted EPS of $5.19
•Full year cash from operations of $569 million, up 8 percent, resulting in record full year free cash flow of $518 million, up 9 percent
•Record fourth quarter orders of $679 million were up 10 percent overall and 7 percent organically
•Fourth quarter EPS of $1.32; adjusted EPS of $1.37
•Announced the acquisition of Abel Pumps, L.P. and certain of its affiliates in January 2021
Full Year 2020
Orders of $2.4 billion were down 3 percent compared with the prior year (-4 percent organic and +1 percent acquisition).
Sales of $2.4 billion were down 6 percent compared with the prior year (-9 percent organic and +3 percent acquisition).
Gross margin of 43.7 percent was down 140 basis points compared with the prior year as a result of lower volume and business mix, partially offset by price capture. Excluding a $4.1 million pre-tax fair value inventory step-up charge related to the Flow MD acquisition, adjusted gross margin of 43.9 percent was down 130 basis points compared with the adjusted prior year.
Operating income of $520.7 million resulted in an operating margin of 22.1 percent, down 110 basis points from the prior year primarily due to lower volume and business mix, partially offset by price capture and cost savings in the current year as well as higher asset impairments in the prior year. Excluding the $4.1 million pre-tax fair value inventory step-up charge and $11.8 million of restructuring expenses and asset impairments, adjusted operating income was $536.6 million with an adjusted operating margin of 22.8 percent, down 140 basis points from the adjusted prior year. Adjusted operating income drove adjusted EBITDA of $622.9 million which was 27 percent of sales and covered interest expense by almost 14 times.
Provision for income taxes of $92.6 million resulted in an effective tax rate (ETR) of 19.7 percent, which was lower than the prior year ETR of 20.2 percent primarily due to benefits associated with the finalization of the Global Intangible Low-Tax Income ("GILTI") regulations in the third quarter of 2020.
Net income was $377.8 million which resulted in EPS of $4.94, down 62 cents, or 11 percent, from the prior year EPS. Excluding the $3.2 million fair value inventory step-up charge, the $6.5 million loss on
early debt redemption, and $9.1 million of restructuring expenses and asset impairments, all net of related tax benefits, adjusted EPS of $5.19 decreased 61 cents, or 11 percent, from the prior year adjusted EPS.
Cash from operations of $569.3 million was up 8 percent from the prior year and was 151 percent of net income primarily due to working capital improvements, partially offset by lower earnings. Cash from operations led to free cash flow of $517.7 million, which was up 9 percent from the prior year and was 131 percent of adjusted net income.
The Company repurchased 876 thousand shares of common stock for $110.3 million in 2020.
Fourth Quarter 2020
Orders of $678.6 million were up 10 percent compared with the prior year period (+7 percent organic, +1 percent acquisition and +2 percent foreign currency translation).
Sales of $614.8 million were up 2 percent compared with the prior year period (-1 percent organic, +1 percent acquisition and +2 percent foreign currency translation).
Gross margin of 43.8 percent was down 20 basis points compared with the prior year period primarily due to lower volume and business mix, partially offset by price capture.
Operating income of $139.0 million resulted in an operating margin of 22.6 percent, up 50 basis points compared to the prior year period due to price capture and cost savings, partially offset by lower volume and business mix. Excluding $5.0 million of restructuring expenses and asset impairments, adjusted operating income was $144.0 million with an adjusted operating margin of 23.4 percent, up 10 basis points compared to the adjusted prior year period. Adjusted operating income drove adjusted EBITDA of $167.2 million which was 27 percent of sales and covered interest expense by over 15 times.
Provision for income taxes of $28.8 million resulted in an ETR of 22.2 percent, which was higher than the prior year period ETR of 20.6 percent primarily due to the revaluation of foreign deferred income tax balances necessitated by changes in foreign tax rates.
Net income was $101.1 million which resulted in EPS of $1.32, up 6 cents, or 5 percent, from the prior year period EPS. Excluding restructuring expenses and asset impairments, adjusted EPS of $1.37 increased 4 cents, or 3 percent, from the prior year period adjusted EPS.
Cash from operations of $161.4 million was up 7 percent from the prior year period and was 160 percent of net income. Cash from operations led to free cash flow of $149.3 million, which was up 9 percent compared to the prior year period and was 142 percent of adjusted net income.
| “I want to thank the entire IDEX team for their perseverance and performance throughout the pandemic in 2020. With our focus on workplace safety, business continuity, liquidity and playing offense opportunistically, we were able to deliver for our shareholders, customers and employees in 2020. I am honored to be the leader of this outstanding global organization. | |||||
Full year organic orders and sales were down 4 and 9 percent, respectively. Adjusted EPS of $5.19 was only down 11 percent from the adjusted prior year due to our proactive restructuring actions and tight control of discretionary costs. Record free cash flow of $518 million in 2020, which was 9% higher than prior year, is a testament to the financial durability of our business. | |||||
| Our business continued to advance in the fourth quarter, with most end markets improving and all three segments experiencing positive organic order growth. Fourth quarter organic orders increased 7 percent, while organic sales were only down 1 percent. Record fourth quarter orders of $679 million increased year-end backlog by $64 million. Adjusted EPS of $1.37 was 3 percent higher compared to the adjusted prior year period while free cash flow of $149 million was 9 percent higher than the prior year period. | |||||
| Last month we announced a definitive agreement to acquire Abel Pumps L.P., which will be an excellent complement to our existing pump platform within the Fluid & Metering Technologies (FMT) segment. The M&A opportunity funnel continues to improve and we are fully committed to putting our strong balance sheet to work through focused resource deployment and process optimization. We continue to invest in our best targeted organic growth opportunities. We increased capital investment in 2020, maintaining our commitment to the company’s long-term health, while managing implications of the pandemic. | |||||
| Based on our strong orders in the fourth quarter and sustained sequential improvement, we expect our end markets will continue to improve in 2021. We are projecting 6 to 8 percent organic sales growth for the full year 2021, with a 2 to 4 percent organic sales increase in the first quarter. Full year 2021 EPS is projected to be $5.65 to $5.95, with first quarter EPS of $1.38 to $1.42.” | |||||
| Eric D. Ashleman | |||||
| Chief Executive Officer and President | |||||
Fourth Quarter 2020 Segment Highlights
Fluid & Metering Technologies
•Sales of $229.6 million reflected a 1 percent increase compared to the fourth quarter of 2019 (-4 percent organic, +3 percent acquisition and +2 percent foreign currency translation).
•Operating income of $58.9 million resulted in an operating margin of 25.7 percent, a 150 basis point decrease compared to the prior year period primarily due to lower volume, business mix, higher restructuring expenses and asset impairments and the dilutive impact on margins from the Flow MD acquisition, partially offset by price capture and cost savings. Excluding $3.1 million of restructuring expenses and asset impairments, adjusted operating income was $62.0 million with an adjusted operating margin of 27.0 percent, a 100 basis point decrease compared to the adjusted prior year period.
•EBITDA of $66.3 million resulted in an EBITDA margin of 28.9 percent. Excluding $3.1 million of restructuring expenses and asset impairments, adjusted EBITDA of $69.4 million resulted in an adjusted EBITDA margin of 30.2 percent, a 30 basis point decrease compared to the adjusted prior year period.
Health & Science Technologies
•Sales of $235.9 million reflected a 4 percent increase compared to the fourth quarter of 2019 (+2 percent organic and +2 percent foreign currency translation).
•Operating income of $55.8 million resulted in an operating margin of 23.7 percent, a 210 basis point increase compared to the prior year period primarily due to price capture, higher volume and cost savings in the current year period as well as the asset impairments in the prior year period. Excluding $0.6 million of restructuring expenses and asset impairments, adjusted operating
income was $56.4 million with an adjusted operating margin of 23.9 percent, a 110 basis point increase compared to the adjusted prior year period.
•EBITDA of $66.7 million resulted in an EBITDA margin of 28.3 percent. Excluding $0.6 million of restructuring expenses and asset impairments, adjusted EBITDA of $67.3 million resulted in an adjusted EBITDA margin of 28.5 percent, a 150 basis point increase compared to the adjusted prior year period.
Fire & Safety/Diversified Products
•Sales of $150.6 million reflected a 1 percent decrease compared to the fourth quarter of 2019 (-3 percent organic and +2 percent foreign currency translation).
•Operating income of $40.2 million resulted in an operating margin of 26.7 percent, an 80 basis point increase compared to the prior year period primarily due to price capture and cost savings, partially offset by lower volume. Excluding $0.6 million of restructuring expenses and asset impairments, adjusted operating income was $40.8 million with an adjusted operating margin of 27.1 percent, a 90 basis point increase compared to the adjusted prior year period.
•EBITDA of $43.8 million resulted in an EBITDA margin of 29.1 percent. Excluding $0.6 million of restructuring expenses and asset impairments, adjusted EBITDA of $44.4 million resulted in an adjusted EBITDA margin of 29.5 percent, a 130 basis point increase compared to the adjusted prior year period.
For the fourth quarter of 2020, Fluid & Metering Technologies contributed 37 percent of sales, 38 percent of operating income and 37 percent of EBITDA; Health & Science Technologies accounted for 38 percent of sales, 36 percent of operating income and 38 percent of EBITDA; and Fire & Safety/Diversified Products represented 25 percent of sales, 26 percent of operating income and 25 percent of EBITDA.
Corporate Costs
Corporate costs decreased to $63.9 million in 2020 compared to $69.2 million in 2019 as a result of lower discretionary spending and lower stock compensation costs due to the departure of our former Chief Executive Officer, partially offset by increased funding of the IDEX Foundation and higher acquisition costs.
Corporate costs increased to $15.3 million in the fourth quarter of 2020 from $14.2 million in the fourth quarter of 2019 primarily as a result of higher variable compensation costs, higher acquisition costs and increased funding of the IDEX Foundation, partially offset by lower stock compensation costs due to the departure of our former Chief Executive Officer.
Acquisition
On January 8, 2021, the Company entered into a definitive agreement to acquire Abel Pumps, L.P. and certain of its affiliates (ABEL) for cash consideration of $103.5 million. ABEL is based in Büchen, Germany, with sales and service locations in Madrid, Spain and Pittsburgh, Pennsylvania. ABEL designs and manufactures highly engineered reciprocating positive displacement pumps for a variety of end markets, including mining, marine, power, water, wastewater and other general industries. With annual sales of approximately $34 million, ABEL will be part of our Pumps platform within the Fluid and Metering Technologies segment. The Company expects to close the transaction by the end of the first quarter 2021 subject to regulatory approval and customary closing conditions.
Restructuring Expenses and Asset Impairments
The Company recorded $5.0 million and $11.8 million of restructuring expenses and asset impairments in the fourth quarter and full year 2020, respectively, to facilitate long-term, sustainable growth through cost reduction actions, primarily consisting of employee reductions, facility rationalization and impairment charges. The fourth quarter and full year 2020 included $3.1 million of impairment charges primarily related to the consolidation of certain facilities in the Fluid & Metering Technologies segment.
COVID-19 Impact
The Company has adapted to help in the fight against COVID-19 with several of our businesses pivoting to support many products that are being used in the fight against COVID-19. Safety is our top priority and we have implemented protocols at all of our facilities, including temperature taking, social distancing, enhanced cleaning and face coverings. These measures have enabled successful business continuity, allowing our facilities to remain in operation with only temporary shutdowns at the initial onset of the COVID-19 pandemic. Although we have remained in operation throughout the pandemic, satisfying customer needs in part through our focus on the development and manufacturing of products used in the fight against COVID-19, the pandemic and the enacted containment measures have adversely affected our business and results of operations. From the onset of the pandemic through the second quarter of 2020, our customers purchased less product than they have historically purchased; however, beginning in the third quarter and continuing through the fourth quarter of 2020 we began to see improvement in our end markets and we expect our end markets to continue to normalize to historical levels through 2021. Additionally, IDEX has implemented cost reduction actions, including employee reductions and facility consolidations, and continues to maintain a tight cost control environment. Moreover, COVID-19 and related measures to contain its impact have caused material disruptions in both national and global financial markets and economies. The continuing impact of COVID-19 and the enacted containment measures cannot be predicted and may continue to adversely affect, perhaps materially, our business, results of operations, financial condition and liquidity.
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. Management believes these non-U.S. GAAP financial performance metrics provide investors with greater insight, transparency and a more comprehensive understanding of the financial information used by management in its financial and operational decision making because certain of these adjusted metrics exclude items not reflective of ongoing operations, such as restructuring expenses and asset impairments, fair value inventory step-up charges and the loss on early debt redemption. 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 prior to divestiture and the impact of foreign currency translation.
•Adjusted gross profit is calculated as gross profit plus fair value inventory step-up charges.
•Adjusted gross margin is calculated as adjusted gross profit divided by net sales.
•Adjusted operating income is calculated as operating income plus fair value inventory step-up charges plus restructuring expenses and asset impairments.
•Adjusted operating margin is calculated as adjusted operating income divided by net sales.
•Adjusted net income is calculated as net income plus fair value inventory step-up charges plus restructuring expenses and asset impairments plus the loss on early debt redemption, net of the statutory tax expense or benefit.
•Adjusted EPS is calculated as adjusted net income divided by the diluted weighted average shares outstanding.
•EBITDA is calculated as net income plus interest expense plus provision for income taxes plus depreciation and amortization. We reconcile 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 fair value inventory step-up charges plus restructuring expenses and asset impairments plus the loss on early debt redemption.
•Adjusted EBITDA margin is calculated as adjusted EBITDA divided by net sales.
•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, 2020 | For the Year Ended December 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||
| FMT | HST | FSDP | IDEX | FMT | HST | FSDP | IDEX | ||||||||||||||||||||||||||||||||||||||||
| Change in net sales | 1 | % | 4 | % | (1 | %) | 2 | % | (6 | %) | (2 | %) | (10 | %) | (6 | %) | |||||||||||||||||||||||||||||||
| - Net impact from acquisitions | 3 | % | — | % | — | % | 1 | % | 6 | % | 2 | % | — | % | 3 | % | |||||||||||||||||||||||||||||||
| - Impact from FX | 2 | % | 2 | % | 2 | % | 2 | % | — | % | — | % | 1 | % | — | % | |||||||||||||||||||||||||||||||
| Change in organic net sales | (4 | %) | 2 | % | (3 | %) | (1 | %) | (12 | %) | (4 | %) | (11 | %) | (9 | %) | |||||||||||||||||||||||||||||||
Table 2: Reconciliations of Reported-to-Adjusted Gross Profit and Margin (dollars in thousands)
| For the Quarter Ended December 31, | For the Year Ended December 31, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Gross profit | $ | 269,168 | $ | 266,885 | $ | 1,027,424 | $ | 1,125,034 | |||||||||||||||
| + Fair value inventory step-up charge | — | — | 4,107 | 3,340 | |||||||||||||||||||
| Adjusted gross profit | $ | 269,168 | $ | 266,885 | $ | 1,031,531 | $ | 1,128,374 | |||||||||||||||
| Net sales | $ | 614,822 | $ | 605,997 | $ | 2,351,646 | $ | 2,494,573 | |||||||||||||||
| Gross margin | 43.8 | % | 44.0 | % | 43.7 | % | 45.1 | % | |||||||||||||||
| Adjusted gross margin | 43.8 | % | 44.0 | % | 43.9 | % | 45.2 | % | |||||||||||||||
Table 3: Reconciliations of Reported-to-Adjusted Operating Income and Margin (dollars in thousands)
| For the Quarter Ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2020 | 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FMT | HST | FSDP | Corporate | IDEX | FMT | HST | FSDP | Corporate | IDEX | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Reported operating income (loss) | $ | 58,900 | $ | 55,794 | $ | 40,214 | $ | (15,943) | $138,965 | $ | 61,763 | $ | 49,113 | $ | 39,349 | $ | (16,052) | $134,173 | |||||||||||||||||||||||||||||||||||||||||
| + Restructuring expenses and asset impairments | 3,147 | 580 | 634 | 657 | 5,018 | 1,949 | 2,723 | 441 | 1,849 | 6,962 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted operating income (loss) | $ | 62,047 | $ | 56,374 | $ | 40,848 | $ | (15,286) | $ | 143,983 | $ | 63,712 | $ | 51,836 | $ | 39,790 | $ | (14,203) | $ | 141,135 | |||||||||||||||||||||||||||||||||||||||
| Net sales (eliminations) | $ | 229,584 | $ | 235,857 | $ | 150,555 | $ | (1,174) | $ | 614,822 | $ | 227,456 | $ | 227,293 | $ | 152,025 | $ | (777) | $ | 605,997 | |||||||||||||||||||||||||||||||||||||||
| Reported operating margin | 25.7 | % | 23.7 | % | 26.7 | % | n/m | 22.6 | % | 27.2 | % | 21.6 | % | 25.9 | % | n/m | 22.1 | % | |||||||||||||||||||||||||||||||||||||||||
| Adjusted operating margin | 27.0 | % | 23.9 | % | 27.1 | % | n/m | 23.4 | % | 28.0 | % | 22.8 | % | 26.2 | % | n/m | 23.3 | % | |||||||||||||||||||||||||||||||||||||||||
| For the Year Ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2020 | 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FMT | HST | FSDP | Corporate | IDEX | FMT | HST | FSDP | Corporate | IDEX | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Reported operating income (loss) | $ | 235,011 | $ | 206,356 | $ | 144,191 | $ | (64,845) | $520,713 | $ | 285,256 | $ | 200,200 | $ | 165,258 | $ | (71,711) | $579,003 | |||||||||||||||||||||||||||||||||||||||||
| + Restructuring expenses and asset impairments | 5,580 | 2,742 | 2,524 | 930 | 11,776 | 2,879 | 14,249 | 1,364 | 2,552 | 21,044 | |||||||||||||||||||||||||||||||||||||||||||||||||
| + Fair value inventory step-up charge | 4,107 | — | — | — | 4,107 | — | 3,340 | — | — | 3,340 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted operating income (loss) | $ | 244,698 | $ | 209,098 | $ | 146,715 | $ | (63,915) | $ | 536,596 | $ | 288,135 | $ | 217,789 | $ | 166,622 | $ | (69,159) | $ | 603,387 | |||||||||||||||||||||||||||||||||||||||
| Net sales (eliminations) | $ | 896,304 | $ | 895,962 | $ | 562,851 | $ | (3,471) | $ | 2,351,646 | $ | 957,028 | $ | 914,446 | $ | 626,770 | $ | (3,671) | $ | 2,494,573 | |||||||||||||||||||||||||||||||||||||||
| Reported operating margin | 26.2 | % | 23.0 | % | 25.6 | % | n/m | 22.1 | % | 29.8 | % | 21.9 | % | 26.4 | % | n/m | 23.2 | % | |||||||||||||||||||||||||||||||||||||||||
| Adjusted operating margin | 27.3 | % | 23.3 | % | 26.1 | % | n/m | 22.8 | % | 30.1 | % | 23.8 | % | 26.6 | % | n/m | 24.2 | % | |||||||||||||||||||||||||||||||||||||||||
Table 4: 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, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Reported net income | $ | 101,068 | $ | 96,850 | $ | 377,778 | $ | 425,521 | |||||||||||||||
| + Restructuring expenses and asset impairments | 5,018 | 6,962 | 11,776 | 21,044 | |||||||||||||||||||
| + Tax impact on restructuring expenses and asset impairments | (1,182) | (1,630) | (2,722) | (4,966) | |||||||||||||||||||
| + Fair value inventory step-up charge | — | — | 4,107 | 3,340 | |||||||||||||||||||
| + Tax impact on fair value inventory step-up charge | — | — | (932) | (735) | |||||||||||||||||||
| + Loss on early debt redemption | — | — | 8,421 | — | |||||||||||||||||||
| + Tax impact on loss on early debt redemption | — | — | (1,912) | — | |||||||||||||||||||
| Adjusted net income | $ | 104,904 | $ | 102,182 | $ | 396,516 | $ | 444,204 | |||||||||||||||
| For the Quarter Ended December 31, | For the Year Ended December 31, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Reported EPS | $ | 1.32 | $ | 1.26 | $ | 4.94 | $ | 5.56 | |||||||||||||||
| + Restructuring expenses and asset impairments | 0.06 | 0.09 | 0.15 | 0.28 | |||||||||||||||||||
| + Tax impact on restructuring expenses and asset impairments | (0.01) | (0.02) | (0.03) | (0.07) | |||||||||||||||||||
| + Fair value inventory step-up charge | — | — | 0.05 | 0.04 | |||||||||||||||||||
| + Tax impact on fair value inventory step-up charge | — | — | (0.01) | (0.01) | |||||||||||||||||||
| + Loss on early debt redemption | — | — | 0.11 | — | |||||||||||||||||||
| + Tax impact on loss on early debt redemption | — | — | (0.02) | — | |||||||||||||||||||
| Adjusted EPS | $ | 1.37 | $ | 1.33 | $ | 5.19 | $ | 5.80 | |||||||||||||||
| Diluted weighted average common shares outstanding | 76,367 | 76,570 | 76,400 | 76,454 | |||||||||||||||||||
Table 5: Reconciliations of EBITDA to Net Income (dollars in thousands)
| For the Quarter Ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2020 | 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FMT | HST | FSDP | Corporate | IDEX | FMT | HST | FSDP | Corporate | IDEX | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Reported operating income (loss) | $ | 58,900 | $ | 55,794 | $ | 40,214 | $ | (15,943) | $ | 138,965 | $ | 61,763 | $ | 49,113 | $ | 39,349 | $ | (16,052) | $ | 134,173 | |||||||||||||||||||||||||||||||||||||||
| - Other (income) expense - net | (819) | 64 | 251 | (1,190) | (1,694) | (137) | 805 | 498 | (108) | 1,058 | |||||||||||||||||||||||||||||||||||||||||||||||||
| + Depreciation and amortization | 6,569 | 10,972 | 3,807 | 173 | 21,521 | 5,499 | 10,283 | 3,588 | 160 | 19,530 | |||||||||||||||||||||||||||||||||||||||||||||||||
| EBITDA | 66,288 | 66,702 | 43,770 | (14,580) | 162,180 | 67,399 | 58,591 | 42,439 | (15,784) | 152,645 | |||||||||||||||||||||||||||||||||||||||||||||||||
| - Interest expense | 10,788 | 11,079 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| - Provision for income taxes | 28,803 | 25,186 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| - Depreciation and amortization | 21,521 | 19,530 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reported net income | $ | 101,068 | $ | 96,850 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net sales (eliminations) | $ | 229,584 | $ | 235,857 | $ | 150,555 | $ | (1,174) | $ | 614,822 | $ | 227,456 | $ | 227,293 | $ | 152,025 | $ | (777) | $ | 605,997 | |||||||||||||||||||||||||||||||||||||||
| Reported operating margin | 25.7 | % | 23.7 | % | 26.7 | % | n/m | 22.6 | % | 27.2 | % | 21.6 | % | 25.9 | % | n/m | 22.1 | % | |||||||||||||||||||||||||||||||||||||||||
| EBITDA margin | 28.9 | % | 28.3 | % | 29.1 | % | n/m | 26.4 | % | 29.6 | % | 25.8 | % | 27.9 | % | n/m | 25.2 | % | |||||||||||||||||||||||||||||||||||||||||
| For the Year Ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2020 | 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FMT | HST | FSDP | Corporate | IDEX | FMT | HST | FSDP | Corporate | IDEX | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Reported operating income (loss) | $ | 235,011 | $ | 206,356 | $ | 144,191 | $ | (64,845) | $ | 520,713 | $ | 285,256 | $ | 200,200 | $ | 165,258 | $ | (71,711) | $ | 579,003 | |||||||||||||||||||||||||||||||||||||||
| - Other (income) expense - net | (854) | (27) | 399 | 6,109 | 5,627 | 475 | 2,441 | 771 | (1,928) | 1,759 | |||||||||||||||||||||||||||||||||||||||||||||||||
| + Depreciation and amortization | 25,939 | 41,778 | 15,216 | 562 | 83,495 | 22,152 | 39,721 | 14,333 | 670 | 76,876 | |||||||||||||||||||||||||||||||||||||||||||||||||
| EBITDA | 261,804 | 248,161 | 159,008 | (70,392) | 598,581 | 306,933 | 237,480 | 178,820 | (69,113) | 654,120 | |||||||||||||||||||||||||||||||||||||||||||||||||
| - Interest expense | 44,746 | 44,341 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| - Provision for income taxes | 92,562 | 107,382 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| - Depreciation and amortization | 83,495 | 76,876 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reported net income | $377,778 | $425,521 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net sales (eliminations) | $ | 896,304 | $ | 895,962 | $ | 562,851 | $ | (3,471) | $ | 2,351,646 | $ | 957,028 | $ | 914,446 | $ | 626,770 | $ | (3,671) | $ | 2,494,573 | |||||||||||||||||||||||||||||||||||||||
| Reported operating margin | 26.2 | % | 23.0 | % | 25.6 | % | n/m | 22.1 | % | 29.8 | % | 21.9 | % | 26.4 | % | n/m | 23.2 | % | |||||||||||||||||||||||||||||||||||||||||
| EBITDA margin | 29.2 | % | 27.7 | % | 28.3 | % | n/m | 25.5 | % | 32.1 | % | 26.0 | % | 28.5 | % | n/m | 26.2 | % | |||||||||||||||||||||||||||||||||||||||||
Table 6: Reconciliations of EBITDA to Adjusted EBITDA (dollars in thousands)
| For the Quarter Ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2020 | 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FMT | HST | FSDP | Corporate | IDEX | FMT | HST | FSDP | Corporate | IDEX | ||||||||||||||||||||||||||||||||||||||||||||||||||
EBITDA(1) | $ | 66,288 | $ | 66,702 | $ | 43,770 | $ | (14,580) | $ | 162,180 | $ | 67,399 | $ | 58,591 | $ | 42,439 | $ | (15,784) | $ | 152,645 | |||||||||||||||||||||||||||||||||||||||
| + Restructuring expenses and asset impairments | 3,147 | 580 | 634 | 657 | 5,018 | 1,949 | 2,723 | 441 | 1,849 | 6,962 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 69,435 | $ | 67,282 | $ | 44,404 | $ | (13,923) | $ | 167,198 | $ | 69,348 | $ | 61,314 | $ | 42,880 | $ | (13,935) | $ | 159,607 | |||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA margin | 30.2 | % | 28.5 | % | 29.5 | % | n/m | 27.2 | % | 30.5 | % | 27.0 | % | 28.2 | % | n/m | 26.3 | % | |||||||||||||||||||||||||||||||||||||||||
| For the Year Ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2020 | 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FMT | HST | FSDP | Corporate | IDEX | FMT | HST | FSDP | Corporate | IDEX | ||||||||||||||||||||||||||||||||||||||||||||||||||
EBITDA(1) | $ | 261,804 | $ | 248,161 | $ | 159,008 | $ | (70,392) | $ | 598,581 | $ | 306,933 | $ | 237,480 | $ | 178,820 | $ | (69,113) | $ | 654,120 | |||||||||||||||||||||||||||||||||||||||
| + Restructuring expenses and asset impairments | 5,580 | 2,742 | 2,524 | 930 | 11,776 | 2,879 | 14,249 | 1,364 | 2,552 | 21,044 | |||||||||||||||||||||||||||||||||||||||||||||||||
| + Fair value inventory step-up charge | 4,107 | — | — | — | 4,107 | — | 3,340 | — | — | 3,340 | |||||||||||||||||||||||||||||||||||||||||||||||||
| + Loss on early debt redemption | — | — | — | 8,421 | 8,421 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 271,491 | $ | 250,903 | $ | 161,532 | $ | (61,041) | $ | 622,885 | $ | 309,812 | $ | 255,069 | $ | 180,184 | $ | (66,561) | $ | 678,504 | |||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA margin | 30.3 | % | 28.0 | % | 28.7 | % | n/m | 26.5 | % | 32.4 | % | 27.9 | % | 28.7 | % | n/m | 27.2 | % | |||||||||||||||||||||||||||||||||||||||||
(1) EBITDA, a non-GAAP financial measure, is reconciled to net income, its most directly comparable GAAP financial measure, immediately above in Table 5.
Table 7: Reconciliations of Cash Flows from Operating Activities to Free Cash Flow (in thousands)
| For the Quarter Ended | For the Year Ended December 31, | ||||||||||||||||||||||||||||
| December 31, | September 30, | ||||||||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2020 | 2019 | |||||||||||||||||||||||||
| Cash flow from operating activities | $ | 161,374 | $ | 151,160 | $ | 153,686 | $ | 569,273 | $ | 528,062 | |||||||||||||||||||
| - Capital expenditures | 12,107 | 14,139 | 18,353 | 51,545 | 50,912 | ||||||||||||||||||||||||
| Free cash flow | $ | 149,267 | $ | 137,021 | $ | 135,333 | $ | 517,728 | $ | 477,150 | |||||||||||||||||||
Conference Call to be Broadcast over the Internet
IDEX will broadcast its fourth quarter earnings conference call over the Internet on Thursday, February 4, 2021 at 9:30 a.m. CT. Chief Executive Officer and President Eric Ashleman 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 #13712088.
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, the Company’s expected organic sales growth, the expected timing and anticipated benefits of the Company’s acquisition of Abel Pumps, L.P. and certain of its affiliates, and the anticipated continuing effects of the coronavirus pandemic, including with respect to the Company's sales, improvements in the Company’s end markets, facility closures, supply chains and access to capital, 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: the duration of the coronavirus pandemic and the continuing effects of the coronavirus pandemic on our ability to operate our business and facilities, on our customers, on supply chains and on the U.S. and global economy generally; 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 and the Company's subsequent quarterly reports filed with the SEC as well as 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 (NYSE: IEX) is a company that has undoubtedly touched your life in some way. In fact, IDEX businesses make thousands of products that are mission-critical components in everyday activities. Chances are the car you’re driving has a BAND-IT® clamp holding your side airbag safely in place. If you were ever in a car accident, a Hurst Jaws of Life® rescue tool may have saved your life. If you or a family member is battling cancer, your doctor may have tested your DNA in a quest to find the best targeted medicine for you. It’s likely your DNA test was run on equipment that contains components made by our growing IDEX Health & Science team. Founded in 1988 with three small, entrepreneurial manufacturing companies, we’re proud to say that we now call 40 diverse businesses around the world part of the IDEX family. With 7,000 employees and manufacturing operations in more than 20 countries, IDEX is a high-performing, global $2+ billion company committed to making trusted solutions that improve lives. IDEX shares are traded on the New York 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.
(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, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Net sales | $ | 614,822 | $ | 605,997 | $ | 2,351,646 | $ | 2,494,573 | |||||||||||||||
| Cost of sales | 345,654 | 339,112 | 1,324,222 | 1,369,539 | |||||||||||||||||||
| Gross profit | 269,168 | 266,885 | 1,027,424 | 1,125,034 | |||||||||||||||||||
| Selling, general and administrative expenses | 125,185 | 125,750 | 494,935 | 524,987 | |||||||||||||||||||
| Restructuring expenses and asset impairments | 5,018 | 6,962 | 11,776 | 21,044 | |||||||||||||||||||
| Operating income | 138,965 | 134,173 | 520,713 | 579,003 | |||||||||||||||||||
| Other (income) expense - net | (1,694) | 1,058 | 5,627 | 1,759 | |||||||||||||||||||
| Interest expense | 10,788 | 11,079 | 44,746 | 44,341 | |||||||||||||||||||
| Income before income taxes | 129,871 | 122,036 | 470,340 | 532,903 | |||||||||||||||||||
| Provision for income taxes | 28,803 | 25,186 | 92,562 | 107,382 | |||||||||||||||||||
| Net income | $ | 101,068 | $ | 96,850 | $ | 377,778 | $ | 425,521 | |||||||||||||||
| Earnings per Common Share: | |||||||||||||||||||||||
| Basic earnings per common share | $ | 1.33 | $ | 1.28 | $ | 4.98 | $ | 5.62 | |||||||||||||||
| Diluted earnings per common share | $ | 1.32 | $ | 1.26 | $ | 4.94 | $ | 5.56 | |||||||||||||||
| Share Data: | |||||||||||||||||||||||
| Basic weighted average common shares outstanding | 75,817 | 75,779 | 75,741 | 75,594 | |||||||||||||||||||
| Diluted weighted average common shares outstanding | 76,367 | 76,570 | 76,400 | 76,454 | |||||||||||||||||||
IDEX CORPORATION
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
| December 31, 2020 | December 31, 2019 | ||||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 1,025,851 | $ | 632,581 | |||||||
| Receivables - net | 293,146 | 298,186 | |||||||||
| Inventories | 289,910 | 293,467 | |||||||||
| Other current assets | 48,324 | 37,211 | |||||||||
| Total current assets | 1,657,231 | 1,261,445 | |||||||||
| Property, plant and equipment - net | 298,273 | 280,316 | |||||||||
| Goodwill and intangible assets | 2,311,137 | 2,167,776 | |||||||||
| Other noncurrent assets | 147,757 | 104,375 | |||||||||
| Total assets | $ | 4,414,398 | $ | 3,813,912 | |||||||
| Liabilities and equity | |||||||||||
| Current liabilities | |||||||||||
| Trade accounts payable | $ | 151,993 | $ | 138,463 | |||||||
| Accrued expenses | 208,828 | 180,290 | |||||||||
| Short-term borrowings | 88 | 388 | |||||||||
| Dividends payable | 38,149 | 38,736 | |||||||||
| Total current liabilities | 399,058 | 357,877 | |||||||||
| Long-term borrowings | 1,044,354 | 848,864 | |||||||||
| Other noncurrent liabilities | 430,660 | 343,942 | |||||||||
| Total liabilities | 1,874,072 | 1,550,683 | |||||||||
| Shareholders' equity | 2,540,203 | 2,263,229 | |||||||||
| Noncontrolling interest | 123 | — | |||||||||
| Total equity | 2,540,326 | 2,263,229 | |||||||||
| Total liabilities and equity | $ | 4,414,398 | $ | 3,813,912 | |||||||
IDEX CORPORATION
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
| For the Year Ended December 31, | |||||||||||
| 2020 | 2019 | ||||||||||
| Cash flows from operating activities | |||||||||||
| Net income | $ | 377,778 | $ | 425,521 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| (Gain) loss on sale of fixed assets - net | (868) | 156 | |||||||||
| Asset impairments | 3,087 | 10,155 | |||||||||
| Depreciation and amortization | 41,651 | 39,543 | |||||||||
| Amortization of intangible assets | 41,844 | 37,333 | |||||||||
| Amortization of debt issuance expenses | 1,716 | 1,355 | |||||||||
| Share-based compensation expense | 19,375 | 27,669 | |||||||||
| Deferred income taxes | 11,038 | 6,625 | |||||||||
| Non-cash interest expense associated with forward starting swaps | 6,021 | 6,327 | |||||||||
| Changes in (net of the effect from acquisitions): | |||||||||||
| Receivables | 20,873 | 22,338 | |||||||||
| Inventories | 36,523 | (3,322) | |||||||||
| Other current assets | (10,276) | (2,361) | |||||||||
| Trade accounts payable | 2,702 | (9,115) | |||||||||
| Deferred revenue | 38,967 | 8,680 | |||||||||
| Accrued expenses | (15,326) | (46,664) | |||||||||
| Other - net | (5,832) | 3,822 | |||||||||
| Net cash flows provided by operating activities | 569,273 | 528,062 | |||||||||
| Cash flows from investing activities | |||||||||||
| Purchases of property, plant and equipment | (51,545) | (50,912) | |||||||||
| Acquisition of businesses, net of cash acquired | (123,133) | (87,180) | |||||||||
| Contributions received from joint venture partner | 120 | — | |||||||||
| Proceeds from disposal of fixed assets | 2,287 | 962 | |||||||||
| Other - net | (306) | 115 | |||||||||
| Net cash flows used in investing activities | (172,577) | (137,015) | |||||||||
| Cash flows from financing activities | |||||||||||
| Borrowings under revolving credit facilities | 150,000 | — | |||||||||
| Proceeds from issuance of 3.0% Senior Notes | 499,100 | — | |||||||||
| Payment of 4.5% Senior Notes | (300,000) | — | |||||||||
| Payments under revolving credit facilities | (150,000) | — | |||||||||
| Payments under other long term borrowings | (396) | (50,057) | |||||||||
| Payment of make-whole redemption premium | (6,756) | — | |||||||||
| Debt issuance costs | (4,749) | — | |||||||||
| Dividends paid | (151,838) | (147,208) | |||||||||
| Proceeds from stock option exercises | 44,587 | 38,809 | |||||||||
| Repurchases of common stock | (110,342) | (54,668) | |||||||||
| Shares surrendered for tax withholding | (12,208) | (12,596) | |||||||||
| Other - net | — | (1,865) | |||||||||
| Net cash flows used in financing activities | (42,602) | (227,585) | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | 39,176 | 2,712 | |||||||||
| Net increase in cash | 393,270 | 166,174 | |||||||||
| Cash and cash equivalents at beginning of year | 632,581 | 466,407 | |||||||||
| Cash and cash equivalents at end of period | $ | 1,025,851 | $ | 632,581 | |||||||
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) | |||||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
| Fluid & Metering Technologies | ||||||||||||||||||||||||||
| Net sales | $ | 229,584 | $ | 227,456 | $ | 896,304 | $ | 957,028 | ||||||||||||||||||
Operating income (b) | 58,900 | 61,763 | 235,011 | 285,256 | ||||||||||||||||||||||
| Operating margin | 25.7 | % | 27.2 | % | 26.2 | % | 29.8 | % | ||||||||||||||||||
EBITDA(c) | $ | 66,288 | $ | 67,399 | $ | 261,804 | $ | 306,933 | ||||||||||||||||||
EBITDA margin(c) | 28.9 | % | 29.6 | % | 29.2 | % | 32.1 | % | ||||||||||||||||||
| Depreciation and amortization | $ | 6,569 | $ | 5,499 | $ | 25,939 | $ | 22,152 | ||||||||||||||||||
| Capital expenditures | 3,150 | 7,078 | 11,924 | 17,285 | ||||||||||||||||||||||
| Health & Science Technologies | ||||||||||||||||||||||||||
| Net sales | $ | 235,857 | $ | 227,293 | $ | 895,962 | $ | 914,446 | ||||||||||||||||||
Operating income (b) | 55,794 | 49,113 | 206,356 | 200,200 | ||||||||||||||||||||||
| Operating margin | 23.7 | % | 21.6 | % | 23.0 | % | 21.9 | % | ||||||||||||||||||
EBITDA(c) | $ | 66,702 | $ | 58,591 | $ | 248,161 | $ | 237,480 | ||||||||||||||||||
EBITDA margin(c) | 28.3 | % | 25.8 | % | 27.7 | % | 26.0 | % | ||||||||||||||||||
| Depreciation and amortization | $ | 10,972 | $ | 10,283 | $ | 41,778 | $ | 39,721 | ||||||||||||||||||
| Capital expenditures | 6,784 | 5,800 | 27,626 | 22,001 | ||||||||||||||||||||||
| Fire & Safety/Diversified Products | ||||||||||||||||||||||||||
| Net sales | $ | 150,555 | $ | 152,025 | $ | 562,851 | $ | 626,770 | ||||||||||||||||||
Operating income (b) | 40,214 | 39,349 | 144,191 | 165,258 | ||||||||||||||||||||||
| Operating margin | 26.7 | % | 25.9 | % | 25.6 | % | 26.4 | % | ||||||||||||||||||
EBITDA(c) | $ | 43,770 | $ | 42,439 | $ | 159,008 | $ | 178,820 | ||||||||||||||||||
EBITDA margin(c) | 29.1 | % | 27.9 | % | 28.3 | % | 28.5 | % | ||||||||||||||||||
| Depreciation and amortization | $ | 3,807 | $ | 3,588 | $ | 15,216 | $ | 14,333 | ||||||||||||||||||
| Capital expenditures | 2,379 | 1,067 | 8,913 | 9,811 | ||||||||||||||||||||||
| Corporate Office and Eliminations | ||||||||||||||||||||||||||
| Intersegment sales eliminations | $ | (1,174) | $ | (777) | $ | (3,471) | $ | (3,671) | ||||||||||||||||||
Operating income (b) | (15,943) | (16,052) | (64,845) | (71,711) | ||||||||||||||||||||||
EBITDA(c) | (14,580) | (15,784) | (70,392) | (69,113) | ||||||||||||||||||||||
Depreciation and amortization (d) | 173 | 160 | 562 | 670 | ||||||||||||||||||||||
| Capital expenditures | (206) | 194 | 3,082 | 1,815 | ||||||||||||||||||||||
| Company | ||||||||||||||||||||||||||
| Net sales | $ | 614,822 | $ | 605,997 | $ | 2,351,646 | $ | 2,494,573 | ||||||||||||||||||
| Operating income | 138,965 | 134,173 | 520,713 | 579,003 | ||||||||||||||||||||||
| Operating margin | 22.6 | % | 22.1 | % | 22.1 | % | 23.2 | % | ||||||||||||||||||
EBITDA(c) | $ | 162,180 | $ | 152,645 | $ | 598,581 | $ | 654,120 | ||||||||||||||||||
EBITDA margin(c) | 26.4 | % | 25.2 | % | 25.5 | % | 26.2 | % | ||||||||||||||||||
Depreciation and amortization (d) | $ | 21,521 | $ | 19,530 | $ | 83,495 | $ | 76,876 | ||||||||||||||||||
| Capital expenditures | 12,107 | 14,139 | 51,545 | 50,912 | ||||||||||||||||||||||
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) | |||||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
| Fluid & Metering Technologies | ||||||||||||||||||||||||||
| Net sales | $ | 229,584 | $ | 227,456 | $ | 896,304 | $ | 957,028 | ||||||||||||||||||
Adjusted operating income (b)(c) | 62,047 | 63,712 | 244,698 | 288,135 | ||||||||||||||||||||||
Adjusted operating margin(c) | 27.0 | % | 28.0 | % | 27.3 | % | 30.1 | % | ||||||||||||||||||
Adjusted EBITDA(c) | $ | 69,435 | $ | 69,348 | $ | 271,491 | $ | 309,812 | ||||||||||||||||||
Adjusted EBITDA margin(c) | 30.2 | % | 30.5 | % | 30.3 | % | 32.4 | % | ||||||||||||||||||
| Depreciation and amortization | $ | 6,569 | $ | 5,499 | $ | 25,939 | $ | 22,152 | ||||||||||||||||||
| Capital expenditures | 3,150 | 7,078 | 11,924 | 17,285 | ||||||||||||||||||||||
| Health & Science Technologies | ||||||||||||||||||||||||||
| Net sales | $ | 235,857 | $ | 227,293 | $ | 895,962 | $ | 914,446 | ||||||||||||||||||
Adjusted operating income (b)(c) | 56,374 | 51,836 | 209,098 | 217,789 | ||||||||||||||||||||||
Adjusted operating margin(c) | 23.9 | % | 22.8 | % | 23.3 | % | 23.8 | % | ||||||||||||||||||
Adjusted EBITDA(c) | $ | 67,282 | $ | 61,314 | $ | 250,903 | $ | 255,069 | ||||||||||||||||||
Adjusted EBITDA margin(c) | 28.5 | % | 27.0 | % | 28.0 | % | 27.9 | % | ||||||||||||||||||
| Depreciation and amortization | $ | 10,972 | $ | 10,283 | $ | 41,778 | $ | 39,721 | ||||||||||||||||||
| Capital expenditures | 6,784 | 5,800 | 27,626 | 22,001 | ||||||||||||||||||||||
| Fire & Safety/Diversified Products | ||||||||||||||||||||||||||
| Net sales | $ | 150,555 | $ | 152,025 | $ | 562,851 | $ | 626,770 | ||||||||||||||||||
Adjusted operating income (b)(c) | 40,848 | 39,790 | 146,715 | 166,622 | ||||||||||||||||||||||
Adjusted operating margin(c) | 27.1 | % | 26.2 | % | 26.1 | % | 26.6 | % | ||||||||||||||||||
Adjusted EBITDA(c) | $ | 44,404 | $ | 42,880 | $ | 161,532 | $ | 180,184 | ||||||||||||||||||
Adjusted EBITDA margin(c) | 29.5 | % | 28.2 | % | 28.7 | % | 28.7 | % | ||||||||||||||||||
| Depreciation and amortization | $ | 3,807 | $ | 3,588 | $ | 15,216 | $ | 14,333 | ||||||||||||||||||
| Capital expenditures | 2,379 | 1,067 | 8,913 | 9,811 | ||||||||||||||||||||||
| Corporate Office and Eliminations | ||||||||||||||||||||||||||
| Intersegment sales eliminations | $ | (1,174) | $ | (777) | $ | (3,471) | $ | (3,671) | ||||||||||||||||||
Adjusted operating income (b)(c) | (15,286) | (14,203) | (63,915) | (69,159) | ||||||||||||||||||||||
Adjusted EBITDA(c) | (13,923) | (13,935) | (61,041) | (66,561) | ||||||||||||||||||||||
Depreciation and amortization(d) | 173 | 160 | 562 | 670 | ||||||||||||||||||||||
| Capital expenditures | (206) | 194 | 3,082 | 1,815 | ||||||||||||||||||||||
| Company | ||||||||||||||||||||||||||
| Net sales | $ | 614,822 | $ | 605,997 | $ | 2,351,646 | $ | 2,494,573 | ||||||||||||||||||
Adjusted operating income(c) | 143,983 | 141,135 | 536,596 | 603,387 | ||||||||||||||||||||||
Adjusted operating margin(c) | 23.4 | % | 23.3 | % | 22.8 | % | 24.2 | % | ||||||||||||||||||
Adjusted EBITDA(c) | $ | 167,198 | $ | 159,607 | $ | 622,885 | $ | 678,504 | ||||||||||||||||||
Adjusted EBITDA margin(c) | 27.2 | % | 26.3 | % | 26.5 | % | 27.2 | % | ||||||||||||||||||
Depreciation and amortization (d) | $ | 21,521 | $ | 19,530 | $ | 83,495 | $ | 76,876 | ||||||||||||||||||
| Capital expenditures | 12,107 | 14,139 | 51,545 | 50,912 | ||||||||||||||||||||||
| (a) | Three and twelve month data includes the results of the Flow MD acquisition (February 2020) in the Fluid & Metering Technologies segment and the Velcora acquisition (July 2019) in the Health & Science Technologies segment. | |||||||||||||||||||||||||
| (b) | Segment operating income excludes unallocated corporate operating expenses which are included in Corporate Office and Eliminations. | |||||||||||||||||||||||||
| (c) | These are non-GAAP financial measures. For a reconciliation of these non-GAAP financial measures to their most comparable measure calculated and presented in accordance with GAAP, see the reconciliation tables above. | |||||||||||||||||||||||||
| (d) | Depreciation and amortization excludes amortization of debt issuance costs. | |||||||||||||||||||||||||
1 Fourth Quarter & Full Year 2020 Earnings February 4, 2021
2IDEX Proprietary & Confidential Agenda IDEX Business Overview • IDEX Overview • IDEX Culture • Orders & End Market Update Financials • Q4 & Full Year Performance • Operating Profit 2021 Guidance Q&A
3IDEX Proprietary & Confidential Replay Information • Dial toll–free: 877.660.6853 • International: 201.612.7415 • Conference ID: #13712088 • Log on to: www.idexcorp.com
4IDEX Proprietary & Confidential Cautionary Statement 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, the anticipated effects of the coronavirus pandemic, including with respect to the Company’s revenues, facility closures and access to capital, capital expenditures, acquisitions, cost reductions, cash flow, cash requirements, revenues, earnings, market conditions, global economies, plant and equipment capacity 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: the duration of the coronavirus pandemic and the effects of the coronavirus on our ability to operate our business and facilities, on our customers and on the U.S. and global economy generally; 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. 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 in this presentation and discussion are only made as of today’s date, 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 in this presentation and discussion. This presentation contains non-GAAP financial information. Reconciliations of non-GAAP measures are included either in this presentation or our earnings release for the nine-month period ending December 31, 2020, which is available on our website.
5IDEX Proprietary & Confidential Business Update
6IDEX Proprietary & Confidential IDEX Overview Executed in a Challenging Environment • Our people safe, our customers supported • 80/20 Led Innovation • Record Free Cash Flow performance 2021 - Cautiously Bullish • End markets continue to improve • COVID still present, but pivoting operations and commercial focus • Continued evolution of our culture • Diversity Equity & Inclusion Capital Deployment Acceleration • Balance traditional profile with higher growth assets • Incremental resources to support M&A • Technology bets
7IDEX Proprietary & Confidential Diversity, Equity & Inclusion IDEX Foundation Expands Mission • “Equity & Opportunity” added as foundation pillar • Increase funding for enhanced mission • Driving increased engagement across the globe DE&I Worldwide Focus Groups • Listening to frontline employees' perspectives • Developing strategic framework for DE&I • Hiring DE&I leader in 2021
8 Organic Order Performance Quarterly improvement experienced in all segments since COVID peak Industrial Slow Down COVID COVID Recovery
9IDEX Proprietary & Confidential 2021 Market Outlook POSITIVE MOMENTUM Agriculture Water Automotive Semiconductor Food / Pharma Automotive Dispensing STABLE Industrial Chemical Analytical Instrumentation Life Sciences Industrial / Other Fire / Rescue CHALLENGED Energy FLUID & METERING TECHNOLOGY HEALTH & SCIENCE TECHNOLOGY FIRE & SAFETY / DIVERSIFIED
10IDEX Proprietary & Confidential Financials
11IDEX Proprietary & Confidential IDEX 2020 Financial Performance Strong Q4 order growth and excellent operational performance $606 $2,495 $615 $2,352 Q4 Year 2019 2020 $1.33 $5.80 $1.37 $5.19 Q4 Year 2019 2020 23.3% 24.2% 23.4% 22.8% Q4 Year 2019 2020 $137 $477 $149 $518 Q4 Year 2019 2020 Organic: 9% decrease 11% decrease 140 bps decrease 9% increase (Dollars in millions, excl. EPS) Sales Operating Margin* Earnings Per Share* Free Cash Flow *Operating margin and EPS data adjusted for fair value inventory step-up ($4.1M in 2020 and $3.3M in 2019) and restructuring expenses ($5.0M in Q4 2020 and $11.8M in FY 2020; $7.0M in Q4 2019 and $21.0M in FY 2019). Additionally, EPS data was adjusted for loss on early debt redemption ($8.4M in 2020). Organic: 1% decrease 3% increase 10 bps increase 9% increase
12IDEX Proprietary & Confidential 2020 Adjusted Operating Income Walk Cost discipline with strategic reinvestment to spur post-COVID growth (Dollars in millions)
13IDEX Proprietary & Confidential 2021 Guidance Bridge Sales ($M) EPS FY 2020 Actuals - Reported $2,352 $4.94 2020 Restructuring - 0.12 Loss on Bond Extinguishment - 0.09 Inventory Step-Up - 0.04 FY 2020 Actuals - Adjusted $2,352 $5.19 Organic Growth: 6% - 8% $141 - $188 ~0.75 - 0.95 Net Productivity / Inflation 0.04 Structural Cost Actions 0.12 Growth Investments / Discretionary Costs (0.19) - (0.26) Variable Compensation (0.08) - (0.11) Acquisitions / Divestitures $3 (0.03) Operational Range $2,496 - $2,543 $5.70 - $6.00 6% - 8% growth 10% - 16% growth Tax Rate (~23%) (0.18) FX $54 0.13 FY 2021 Plan $2,550 - $2,597 $5.65 - $5.95 8% - 10% growth 9% - 15% growth
14IDEX Proprietary & Confidential 2021 Guidance Bridge Q1 2021 EPS estimate range: $1.38 – $1.42 Organic revenue growth: 2% - 4% Operating margin: ~23.5% Tax rate: ~23% FX impact: ~3.0% topline benefit based on December 31,2020 FX rates Corporate costs: ~$18 million FY 2021 EPS estimate range: $5.65 – $5.95 Organic revenue growth: 6% – 8% Operating margin: ~23.5% - 24.5% FX impact: : ~2.0% topline benefit based on December 31, 2020 FX rates Other modeling items: •Tax rate: ~23% •Cap Ex: ~ $55M •Free cash flow will be approximately 115% - 120% of net income •Corporate costs: ~$70 million •EPS estimate excludes all future acquisitions and associated costs and any future restructuring expenses
15IDEX Proprietary & Confidential Appendix
16IDEX Proprietary & Confidential Fluid & Metering Technologies $217 $947 $231 $888 Q4 Year 2019 2020 $227 $957 $230 $896 Q4 Year 2019 2020 28.0% 30.1% 27.0% 27.3% Q4 Year 2019 2020 Q4 Highlights: Industrial market order rates increased through the quarter Agriculture remains positive as crop price and farmer sentiment grow Chemical market remained soft on delayed projects Water has remained stable as we continue to monitor municipal budgets Volume decline partially mitigated through price capture and cost control Organic: 8% decrease Organic: 12% decrease 100 bps decrease (Dollars in millions) Orders Sales Operating Margin* Q4 Sales Mix: Organic -4% Acquisition 3% FX 2% Reported Sales 1% *Operating margin adjusted for $4.1M in fair value inventory step-up in 2020 and restructuring expenses ($3.1M in Q4 2020 and $5.6M in FY 2020; $1.9M in Q4 2019 and $2.9M in FY 2019). Organic: 3% increase Organic: 4% decrease 280 bps decrease
17IDEX Proprietary & Confidential Health & Science Technologies Q4 Sales Mix: Organic 2% FX 2% Reported Sales 4% Q4 Highlights: Scientific Fluidics & Optics impacted by slow recovery in IVD / Bio Gast performed well on increased COVID related projects MPT experiencing continued strength in Pharma market Sealing Solutions saw strengthening in the Semicon and Automotive market Rebound in core markets combined with new initiatives $253 $922 $276 $943 Q4 Year 2019 2020 $227 $914 $236 $896 Q4 Year 2019 2020 22.8% 23.8%23.9% 23.3% Q4 Year 2019 2020 Organic: 6% increase 110 bps increaseOrganic: 4% decrease (Dollars in millions) Orders Sales Operating Margin* *Operating margin adjusted for $3.3M in fair value inventory step-up in 2019 and restructuring expenses ($0.6M in Q4 2020 and $2.7M in FY 2020; $2.7M in Q4 2019 and $14.2M in FY 2019. Organic: Flat Organic: 2% increase 50 bps decrease
18IDEX Proprietary & Confidential Fire & Safety / Diversified Products Q4 Highlights: Fire markets stabilized; OEM backlogs remain strong Rescue core markets bolstered by new product demand offsetting project delays Band-IT showed recovery in transportation, despite continued challenges in oil & gas Dispensing recovery continued due to paint market release of capital spend Markets stabilized and recovering $147 $620 $174 $589 Q4 Year 2019 2020 $152 $627 $151 $563 Q4 Year 2019 2020 26.2% 26.6% 27.1% 26.1% Q4 Year 2019 2020 Organic: 5% decrease Organic: 11% decrease Q4 Sales Mix: Organic -3% FX 2% Reported Sales -1% (Dollars in millions) Orders Sales Operating Margin* *Operating margin adjusted for restructuring expenses ($0.6M in Q4 2020 and $2.5M in FY 2020; $.4M in Q4 2019 and $1.4M in FY 2019). Organic: 15% increase Organic: 3% decrease 90 bps increase 50 bps decrease