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: July 27, 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 July 27, 2021 , IDEX Corporation (the “Company”) issued a press release announcing financial results for the period ended June 30, 2021.
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.
Q2 2021 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 and the anticipated benefits of the Company’s acquisitions of both ABEL Pumps and Airtech, and are indicated by words or phrases such as “anticipates,” “estimates,” “plans,” “guidance,” “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 COVID-19 pandemic and the continuing effects of the COVID-19 pandemic (including the emergence of variant strains) 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 July 27, 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 | ||||||||
| July 28, 2021 | ||||||||
EXHIBIT INDEX
| Exhibit Number | Description | |||||||
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, JULY 27, 2021
IDEX REPORTS SECOND QUARTER RESULTS; RAISES FULL YEAR GUIDANCE
NORTHBROOK, IL, JULY 27 - IDEX Corporation (NYSE: IEX) today announced its financial results for the three month period ended June 30, 2021.
Second Quarter 2021 Highlights
•Record orders of $751.0 million up 44 percent overall and 39 percent organically compared to Q2 2020
•Record sales of $685.9 million up 22 percent overall and 17 percent organically compared to Q2 2020
• Reported operating margin was 23.1 percent with adjusted operating margin of 24.4 percent
• Reported EPS was $1.34 with adjusted EPS of $1.61
•Full year adjusted EPS guidance raised to $6.26 to $6.36 compared to prior guidance of $6.05 to $6.20
•Finalized the termination of the U.S. pension plan and refinanced the 4.2% Senior Notes to 2.625%
•Completed the acquisition of Airtech Group, Inc., US Valve Corporation and related entities (Airtech)
Second Quarter 2021
Orders of $751.0 million were up 44 percent compared with the prior year period (+39 percent organic, +1 percent acquisitions/divestitures and +4 percent foreign currency translation).
Sales of $685.9 million were up 22 percent compared with the prior year period (+17 percent organic, +1 percent acquisitions/divestitures and +4 percent foreign currency translation).
Gross margin of 44.6 percent was up 280 basis points compared with the prior year period primarily as a result of higher volume and price capture, partially offset by inflation and supply chain constraints. Excluding the $1.8 million pre-tax fair value inventory step-up charge related to our first quarter acquisition of ABEL Pumps, L.P. and certain of its affiliates (ABEL Pumps), adjusted gross margin of 44.9 percent was up 230 basis points compared with the adjusted prior year period.
Operating income of $158.3 million resulted in an operating margin of 23.1 percent, which was up 340 basis points compared with the prior year period primarily as a result of higher volume and price capture, partially offset by inflation, supply chain constraints, a recovery in discretionary spending and a charge related to recording a contingent reserve for a Corporate transaction indemnity. Excluding the $1.8 million pre-tax fair value inventory step-up charge, $3.1 million of restructuring expenses and asset impairments and the $3.9 million charge related to recording a contingent reserve for a Corporate transaction indemnity, adjusted operating income was $167.1 million with an adjusted operating margin of 24.4 percent, up 330 basis points compared with the adjusted prior year period.
Provision for income taxes of $27.7 million in the second quarter of 2021 resulted in an effective tax rate (ETR) of 21.3 percent, which was lower than the prior year period ETR of 22.7 percent primarily due to benefits from foreign sourced income in the second quarter of 2021.
Net income attributable to IDEX was $102.2 million, which resulted in EPS attributable to IDEX of $1.34. Excluding the fair value inventory step-up charge, restructuring expenses and asset impairments, the charge related to recording a contingent reserve for a Corporate transaction indemnity, loss on early debt
redemption and the noncash loss related to the termination of the U.S. pension plan, adjusted EPS attributable to IDEX was $1.61, an increase of 51 cents, or 46.4 percent, from the prior year period. EBITDA of $165.5 million was 24.1 percent of sales and covered interest expense by almost 15 times. Adjusted EBITDA of $192.6 million was 28.1 percent of sales and covered interest expense by over 17 times.
Cash from operations of $136.3 million was down 20 percent from the prior year period primarily due to volume driven increases in working capital and timing of tax payments, partially offset by higher earnings, and was 133 percent of net income attributable to IDEX. Cash from operations led to free cash flow of $120.3 million, which was down 25 percent from the prior year period and was 98 percent of adjusted net income attributable to IDEX.
“Our recovery from the COVID-19 pandemic continues as orders of $751 million and sales of $686 million reached record levels in the second quarter. Backlog is at a record level resulting from strong demand across all segments and geographies, with $65 million added in the second quarter. I want to thank all IDEX team members across the globe who are dealing with many obstacles associated with this recovery. Global supply chain constraints, component shortages and inflation are daily challenges, but the teams continue to deliver for our customers, and IDEX continues to perform extremely well. Our price capture continues to outpace material inflation and we drove strong flow through of 39 percent, resulting in an adjusted operating margin of 24.4 percent and a record adjusted EPS of $1.61. | |||||
We deployed a significant amount of capital in the first half of the year. We invested over $575 million in M&A, including the acquisition of Airtech in the second quarter. We also raised our quarterly dividend by 8 percent to $0.54 per share and increased capital spending in our businesses by 45 percent compared to the first half of 2020. Our balance sheet remains healthy as we have over $2.0 billion available to us for potential investments in additional strategic M&A and organic growth initiatives over the next 12 months. | |||||
Based on the continued strength in orders across our portfolio, record backlog and incremental pricing actions, we are now projecting 11 to 12 percent organic sales growth for the full year 2021, with a 14 to 16 percent organic sales increase in the third quarter. Full year 2021 adjusted EPS is now projected to be $6.26 to $6.36, with third quarter adjusted EPS of $1.57 to $1.61. This includes 6 cents in the second half of the year attributable to the Airtech acquisition.” | |||||
| Eric D. Ashleman | |||||
| Chief Executive Officer and President | |||||
Second Quarter 2021 Segment Highlights
Fluid & Metering Technologies
•Sales of $251.3 million reflected a 15 percent increase compared to the second quarter of 2020 (+8 percent organic, +4 percent acquisition and +3 percent foreign currency translation).
•Operating income of $63.5 million resulted in an operating margin of 25.3 percent, which was up 210 basis points compared with the prior year period primarily due to higher volume, price capture and favorable mix, partially offset by inflation, supply chain constraints and a recovery in discretionary spending. Excluding the $1.8 million pre-tax fair value inventory step-up charge and $1.9 million of restructuring expenses and asset impairments, adjusted operating income was $67.2 million with an adjusted operating margin of 26.7 percent, a 70 basis point increase compared to the prior year period.
•EBITDA of $65.8 million resulted in an EBITDA margin of 26.2 percent. Excluding the $1.8 million pre-tax fair value inventory step-up charge, $1.9 million of restructuring expenses and asset impairments and a $6.3 million noncash loss related to the termination of the U.S. pension plan, adjusted EBITDA of $75.9 million resulted in an adjusted EBITDA margin of 30.2 percent, a 110 basis point increase compared to the prior year period.
Health & Science Technologies
•Sales of $275.0 million reflected a 28 percent increase compared to the second quarter of 2020 (+25 percent organic, -1 percent divestiture and +4 percent foreign currency translation).
•Operating income of $76.0 million resulted in an operating margin of 27.6 percent, which was up 530 basis points compared with the prior year period primarily due to higher volume, price capture and favorable mix, partially offset by inflation, supply chain constraints and a recovery in discretionary spending. Excluding $0.4 million of restructuring expenses and asset impairments, adjusted operating income was $76.4 million with an adjusted operating margin of 27.8 percent, a 500 basis point increase compared to the prior year period.
•EBITDA of $88.2 million resulted in an EBITDA margin of 32.1 percent. Excluding $0.4 million of restructuring expenses and asset impairments, adjusted EBITDA of $88.6 million resulted in an adjusted EBITDA margin of 32.2 percent, a 500 basis point increase compared to the prior year period.
Fire & Safety/Diversified Products
•Sales of $160.8 million reflected a 27 percent increase compared to the second quarter of 2020 (+22 percent organic and +5 percent foreign currency translation).
•Operating income of $42.8 million resulted in an operating margin of 26.6 percent, which was up 390 basis points compared with the prior year period primarily as a result of higher volume and price capture, partially offset by inflation, supply chain constraints and a recovery in discretionary spending. Excluding $0.1 million of restructuring expenses and asset impairments, adjusted operating income was $42.9 million with an adjusted operating margin of 26.7 percent, a 350 basis point increase compared to the prior year period.
•EBITDA of $44.6 million resulted in an EBITDA margin of 27.7 percent. Excluding $0.1 million of restructuring expenses and asset impairments and a $1.8 million noncash loss related to the termination of the U.S. pension plan, adjusted EBITDA of $46.5 million resulted in an adjusted EBITDA margin of 28.9 percent, a 280 basis point increase compared to the prior year period.
Corporate Costs
Corporate costs increased to $24.0 million in the second quarter of 2021 from $17.2 million in the second quarter of 2020 primarily as a result of the charge related to recording a contingent reserve for a Corporate transaction indemnity as well as higher professional fees related to acquisitions and a strategy project.
Debt Offering and Redemption
On May 17, 2021, the Company completed a public offering of $500.0 million 2.625% Senior Notes due June 15, 2031. The net proceeds from the offering were $494.8 million. The net proceeds were used to redeem and repay the $350.0 million 4.2% Senior Notes due December 15, 2021 and the related “make-whole” redemption premium of $6.7 million, with the remaining balance used for general corporate purposes. The Company also recognized $1.9 million of deferred costs related to the 4.2% Senior Notes for a total loss on early debt redemption of $8.6 million, which was recorded within Other (income) expense - net.
Acquisition
On June 14, 2021, the Company acquired Airtech. Airtech designs and manufactures a wide range of highly-engineered pressure technology products, including vacuum pumps, regenerative blowers, compressor systems and valves for a variety of end markets, including alternative energy, food processing, medical, packaging and transportation. Headquartered in Rutherford, New Jersey, with manufacturing operations in Werneck, Germany and Shenzhen, China, Airtech operates in our Performance Pneumatic Technologies reporting unit within the Health & Science Technologies segment.
Airtech was acquired for cash consideration of $469.3 million. The entire purchase price was funded with cash on hand.
Termination of U.S. Pension Plan
On June 17, 2021, the Company settled its remaining obligations under the U.S. pension plan through a combination of lump-sum payments to eligible participants who elected them, and through the purchase of annuities from Legal and General, an A rated third-party insurer. The Company recognized a net loss of $9.7 million which was recorded within Other (income) expense - net. The net loss consisted of $10.7 million related to previously deferred pension related costs, partially offset by $1.0 million related to an increase in plan assets remaining after the settlement.
Non-GAAP Measures of Financial Performance
The Company prepares its public financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP). The Company supplements certain GAAP financial performance metrics with non-GAAP financial performance metrics. Management believes these non-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 fair value inventory step-up charges, restructuring expenses and asset impairments, loss on early debt redemption, noncash loss related to the termination of the U.S. pension plan and a charge related to recording a contingent reserve for a Corporate transaction indemnity. Reconciliations of non-GAAP financial performance metrics to their most comparable 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 GAAP. The Company does not provide forward-looking guidance for EPS on a GAAP basis because it is unable to predict certain items contained in the GAAP measure without unreasonable efforts. These items may include restructuring expenses and asset impairments, special tax items, acquisition-related transaction costs and certain other unusual adjustments. There were no adjustments to 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 plus a charge related to recording a contingent reserve for a Corporate transaction indemnity.
•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 a charge related to recording a contingent reserve for a Corporate transaction indemnity plus the loss on early debt redemption plus the noncash loss related to the termination of the U.S. pension plan, 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.
•EBITDA interest coverage is calculated as EBITDA divided by consolidated interest expense.
•Adjusted EBITDA is calculated as EBITDA plus fair value inventory step-up charges plus restructuring expenses and asset impairments plus a charge related to recording a contingent reserve for a Corporate transaction indemnity plus the loss on early debt redemption plus the noncash loss related to the termination of the U.S. pension plan.
•Adjusted EBITDA margin is calculated as adjusted EBITDA divided by net sales.
•Adjusted EBITDA interest coverage is calculated as Adjusted EBITDA divided by consolidated interest expense.
•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
| Three Months Ended June 30, 2021 | Six Months Ended June 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
| FMT | HST | FSDP | IDEX | FMT | HST | FSDP | IDEX | ||||||||||||||||||||||||||||||||||||||||
| Change in net sales | 15 | % | 28 | % | 27 | % | 22 | % | 11 | % | 19 | % | 18 | % | 16 | % | |||||||||||||||||||||||||||||||
| - Net impact from acquisitions/divestitures | 4 | % | (1 | %) | — | % | 1 | % | 3 | % | — | % | — | % | 1 | % | |||||||||||||||||||||||||||||||
| - Impact from FX | 3 | % | 4 | % | 5 | % | 4 | % | 3 | % | 3 | % | 4 | % | 4 | % | |||||||||||||||||||||||||||||||
| Change in organic net sales | 8 | % | 25 | % | 22 | % | 17 | % | 5 | % | 16 | % | 14 | % | 11 | % | |||||||||||||||||||||||||||||||
Table 2: Reconciliations of Reported-to-Adjusted Gross Profit and Margin (dollars in thousands)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Gross profit | $ | 306,072 | $ | 234,800 | $ | 598,695 | $ | 506,756 | |||||||||||||||
| + Fair value inventory step-up charge | 1,822 | 4,107 | 2,486 | 4,107 | |||||||||||||||||||
| Adjusted gross profit | $ | 307,894 | $ | 238,907 | $ | 601,181 | $ | 510,863 | |||||||||||||||
| Net sales | $ | 685,947 | $ | 561,249 | $ | 1,337,983 | $ | 1,155,711 | |||||||||||||||
| Gross margin | 44.6 | % | 41.8 | % | 44.7 | % | 43.8 | % | |||||||||||||||
| Adjusted gross margin | 44.9 | % | 42.6 | % | 44.9 | % | 44.2 | % | |||||||||||||||
Table 3: Reconciliations of Reported-to-Adjusted Operating Income and Margin (dollars in thousands)
| Three Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FMT | HST | FSDP | Corporate | IDEX | FMT | HST | FSDP | Corporate | IDEX | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Reported operating income (loss) | $ | 63,467 | $ | 75,963 | $ | 42,797 | $ | (23,971) | $ | 158,256 | $ | 50,938 | $ | 48,007 | $ | 28,837 | $ | (17,188) | $ | 110,594 | |||||||||||||||||||||||||||||||||||||||
| + Restructuring expenses and asset impairments | 1,910 | 442 | 119 | 665 | 3,136 | 1,848 | 1,184 | 641 | 168 | 3,841 | |||||||||||||||||||||||||||||||||||||||||||||||||
| + Fair value inventory step-up charge | 1,822 | — | — | — | 1,822 | 4,107 | — | — | — | 4,107 | |||||||||||||||||||||||||||||||||||||||||||||||||
| + Corporate transaction indemnity | — | — | — | 3,900 | 3,900 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted operating income (loss) | $67,199 | $76,405 | $42,916 | $(19,406) | $167,114 | $56,893 | $49,191 | $29,478 | $(17,020) | $118,542 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net sales (eliminations) | $ | 251,277 | $ | 275,012 | $ | 160,812 | $ | (1,154) | $ | 685,947 | $ | 219,112 | $ | 215,668 | $ | 127,076 | $ | (607) | $ | 561,249 | |||||||||||||||||||||||||||||||||||||||
| Reported operating margin | 25.3 | % | 27.6 | % | 26.6 | % | n/m | 23.1 | % | 23.2 | % | 22.3 | % | 22.7 | % | n/m | 19.7 | % | |||||||||||||||||||||||||||||||||||||||||
| Adjusted operating margin | 26.7 | % | 27.8 | % | 26.7 | % | n/m | 24.4 | % | 26.0 | % | 22.8 | % | 23.2 | % | n/m | 21.1 | % | |||||||||||||||||||||||||||||||||||||||||
| Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FMT | HST | FSDP | Corporate | IDEX | FMT | HST | FSDP | Corporate | IDEX | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Reported operating income (loss) | $ | 126,364 | $ | 142,613 | $ | 87,357 | $ | (42,531) | $ | 313,803 | $ | 117,709 | $ | 100,650 | $ | 66,874 | $ | (34,698) | $ | 250,535 | |||||||||||||||||||||||||||||||||||||||
| + Restructuring expenses and asset impairments | 2,853 | 1,067 | 216 | 1,228 | 5,364 | 1,848 | 1,184 | 641 | 168 | 3,841 | |||||||||||||||||||||||||||||||||||||||||||||||||
| + Fair value inventory step-up charge | 2,486 | — | — | — | 2,486 | 4,107 | — | — | — | 4,107 | |||||||||||||||||||||||||||||||||||||||||||||||||
| + Corporate transaction indemnity | — | — | — | 3,900 | 3,900 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted operating income (loss) | $131,703 | $143,680 | $87,573 | $(37,403) | $325,553 | $123,664 | $101,834 | $67,515 | $(34,530) | $258,483 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net sales (eliminations) | $ | 494,642 | $ | 525,381 | $ | 320,296 | $ | (2,336) | $ | 1,337,983 | $ | 445,973 | $ | 439,727 | $ | 271,400 | $ | (1,389) | $ | 1,155,711 | |||||||||||||||||||||||||||||||||||||||
| Reported operating margin | 25.5 | % | 27.1 | % | 27.3 | % | n/m | 23.5 | % | 26.4 | % | 22.9 | % | 24.6 | % | n/m | 21.7 | % | |||||||||||||||||||||||||||||||||||||||||
| Adjusted operating margin | 26.6 | % | 27.3 | % | 27.3 | % | n/m | 24.3 | % | 27.7 | % | 23.2 | % | 24.9 | % | n/m | 22.4 | % | |||||||||||||||||||||||||||||||||||||||||
Table 4: Reconciliations of Reported-to-Adjusted Net Income and EPS (in thousands, except EPS)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Reported net income attributable to IDEX | $ | 102,195 | $ | 70,864 | $ | 214,903 | $ | 172,862 | |||||||||||||||
| + Restructuring expenses and asset impairments | 3,136 | 3,841 | 5,364 | 3,841 | |||||||||||||||||||
| + Tax impact on restructuring expenses and asset impairments | (756) | (837) | (1,289) | (837) | |||||||||||||||||||
| + Fair value inventory step-up charge | 1,822 | 4,107 | 2,486 | 4,107 | |||||||||||||||||||
| + Tax impact on fair value inventory step-up charge | (547) | (932) | (746) | (932) | |||||||||||||||||||
| + Loss on early debt redemption | 8,561 | 8,421 | 8,561 | 8,421 | |||||||||||||||||||
| + Tax impact on loss on early debt redemption | (1,841) | (1,912) | (1,841) | (1,912) | |||||||||||||||||||
| + Termination of the U.S. pension plan | 9,688 | — | 9,688 | — | |||||||||||||||||||
| + Tax impact on termination of the U.S. pension plan | (2,083) | — | (2,083) | — | |||||||||||||||||||
| + Corporate transaction indemnity | 3,900 | — | 3,900 | — | |||||||||||||||||||
| + Tax impact on Corporate transaction indemnity | (839) | — | (839) | — | |||||||||||||||||||
| Adjusted net income attributable to IDEX | $ | 123,236 | $ | 83,552 | $ | 238,104 | $ | 185,550 | |||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Reported diluted EPS attributable to IDEX | $ | 1.34 | $ | 0.93 | $ | 2.81 | $ | 2.27 | |||||||||||||||
| + Restructuring expenses and asset impairments | 0.04 | 0.05 | 0.07 | 0.05 | |||||||||||||||||||
| + Tax impact on restructuring expenses and asset impairments | (0.01) | (0.01) | (0.02) | (0.01) | |||||||||||||||||||
| + Fair value inventory step-up charge | 0.02 | 0.05 | 0.03 | 0.05 | |||||||||||||||||||
| + Tax impact on fair value inventory step-up charge | (0.01) | (0.01) | (0.01) | (0.01) | |||||||||||||||||||
| + Loss on early debt redemption | 0.11 | 0.11 | 0.11 | 0.11 | |||||||||||||||||||
| + Tax impact on loss on early debt redemption | (0.02) | (0.02) | (0.02) | (0.02) | |||||||||||||||||||
| + Termination of the U.S. pension plan | 0.13 | — | 0.13 | — | |||||||||||||||||||
| + Tax impact on termination of the U.S. pension plan | (0.03) | — | (0.03) | — | |||||||||||||||||||
| + Corporate transaction indemnity | 0.05 | — | 0.05 | — | |||||||||||||||||||
| + Tax impact on Corporate transaction indemnity | (0.01) | — | (0.01) | — | |||||||||||||||||||
| Adjusted diluted EPS attributable to IDEX | $ | 1.61 | $ | 1.10 | $ | 3.11 | $ | 2.44 | |||||||||||||||
| Diluted weighted average shares outstanding | 76,429 | 75,937 | 76,385 | 76,198 | |||||||||||||||||||
Table 5: Reconciliations of EBITDA to Net Income (dollars in thousands)
| Three Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FMT | HST | FSDP | Corporate | IDEX | FMT | HST | FSDP | Corporate | IDEX | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Reported operating income (loss) | $ | 63,467 | $ | 75,963 | $ | 42,797 | $ | (23,971) | $ | 158,256 | $ | 50,938 | $ | 48,007 | $ | 28,837 | $ | (17,188) | $ | 110,594 | |||||||||||||||||||||||||||||||||||||||
| - Other (income) expense - net | 5,575 | 291 | 2,054 | 9,255 | 17,175 | (82) | 472 | 123 | 5,947 | 6,460 | |||||||||||||||||||||||||||||||||||||||||||||||||
| + Depreciation and amortization | 7,953 | 12,534 | 3,851 | 111 | 24,449 | 6,809 | 9,917 | 3,796 | 104 | 20,626 | |||||||||||||||||||||||||||||||||||||||||||||||||
| EBITDA | 65,845 | 88,206 | 44,594 | (33,115) | 165,530 | 57,829 | 57,452 | 32,510 | (23,031) | 124,760 | |||||||||||||||||||||||||||||||||||||||||||||||||
| - Interest expense | 11,205 | 12,439 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| - Provision for income taxes | 27,697 | 20,831 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| - Depreciation and amortization | 24,449 | 20,626 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reported net income | $ | 102,179 | $70,864 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net sales (eliminations) | $251,277 | $275,012 | $160,812 | $(1,154) | $685,947 | $219,112 | $215,668 | $127,076 | $(607) | $561,249 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Reported operating margin | 25.3 | % | 27.6 | % | 26.6 | % | n/m | 23.1 | % | 23.2 | % | 22.3 | % | 22.7 | % | n/m | 19.7 | % | |||||||||||||||||||||||||||||||||||||||||
| EBITDA margin | 26.2 | % | 32.1 | % | 27.7 | % | n/m | 24.1 | % | 26.4 | % | 26.6 | % | 25.6 | % | n/m | 22.2 | % | |||||||||||||||||||||||||||||||||||||||||
| EBITDA interest coverage | 14.8 | 10.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FMT | HST | FSDP | Corporate | IDEX | FMT | HST | FSDP | Corporate | IDEX | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Reported operating income (loss) | $126,364 | $142,613 | $87,357 | $(42,531) | $313,803 | $117,709 | $100,650 | $66,874 | $(34,698) | $250,535 | |||||||||||||||||||||||||||||||||||||||||||||||||
| - Other (income) expense - net | 5,584 | (54) | 1,783 | 9,014 | 16,327 | 684 | (59) | (192) | 7,592 | 8,025 | |||||||||||||||||||||||||||||||||||||||||||||||||
| + Depreciation and amortization | 15,006 | 23,047 | 7,723 | 217 | 45,993 | 12,207 | 20,576 | 7,555 | 285 | 40,623 | |||||||||||||||||||||||||||||||||||||||||||||||||
| EBITDA | 135,786 | 165,714 | 93,297 | (51,328) | 343,469 | 129,232 | 121,285 | 74,621 | (42,005) | 283,133 | |||||||||||||||||||||||||||||||||||||||||||||||||
| - Interest expense | 21,981 | 23,316 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| - Provision for income taxes | 60,644 | 46,332 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| - Depreciation and amortization | 45,993 | 40,623 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reported net income | $214,851 | $172,862 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net sales (eliminations) | $494,642 | $525,381 | $320,296 | $(2,336) | $1,337,983 | $445,973 | $439,727 | $271,400 | $(1,389) | $1,155,711 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Reported operating margin | 25.5 | % | 27.1 | % | 27.3 | % | n/m | 23.5 | % | 26.4 | % | 22.9 | % | 24.6 | % | n/m | 21.7 | % | |||||||||||||||||||||||||||||||||||||||||
| EBITDA margin | 27.5 | % | 31.5 | % | 29.1 | % | n/m | 25.7 | % | 29.0 | % | 27.6 | % | 27.5 | % | n/m | 24.5 | % | |||||||||||||||||||||||||||||||||||||||||
| EBITDA interest coverage | 15.6 | 12.1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Table 6 : Reconciliations of EBITDA to Adjusted EBITDA (dollars in thousands)
| Three Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FMT | HST | FSDP | Corporate | IDEX | FMT | HST | FSDP | Corporate | IDEX | ||||||||||||||||||||||||||||||||||||||||||||||||||
EBITDA(1) | $65,845 | $88,206 | $44,594 | $(33,115) | $165,530 | $57,829 | $57,452 | $32,510 | $(23,031) | $124,760 | |||||||||||||||||||||||||||||||||||||||||||||||||
| + Restructuring expenses and asset impairments | 1,910 | 442 | 119 | 665 | 3,136 | 1,848 | 1,184 | 641 | 168 | 3,841 | |||||||||||||||||||||||||||||||||||||||||||||||||
| + Fair value inventory step-up charge | 1,822 | — | — | — | 1,822 | 4,107 | — | — | — | 4,107 | |||||||||||||||||||||||||||||||||||||||||||||||||
| + Loss on early debt redemption | — | — | — | 8,561 | 8,561 | — | — | — | 8,421 | 8,421 | |||||||||||||||||||||||||||||||||||||||||||||||||
| + Termination of the U.S. pension plan | 6,293 | — | 1,782 | 1,613 | 9,688 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| + Corporate transaction indemnity | — | — | — | 3,900 | 3,900 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $75,870 | $88,648 | $46,495 | $(18,376) | $192,637 | $63,784 | $58,636 | $33,151 | $(14,442) | $141,129 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA margin | 30.2 | % | 32.2 | % | 28.9 | % | n/m | 28.1 | % | 29.1 | % | 27.2 | % | 26.1 | % | n/m | 25.1 | % | |||||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA interest coverage | 17.2 | 11.3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FMT | HST | FSDP | Corporate | IDEX | FMT | HST | FSDP | Corporate | IDEX | ||||||||||||||||||||||||||||||||||||||||||||||||||
EBITDA(1) | $135,786 | $165,714 | $93,297 | $(51,328) | $343,469 | $129,232 | $121,285 | $74,621 | $(42,005) | $283,133 | |||||||||||||||||||||||||||||||||||||||||||||||||
| + Restructuring expenses and asset impairments | 2,853 | 1,067 | 216 | 1,228 | 5,364 | 1,848 | 1,184 | 641 | 168 | 3,841 | |||||||||||||||||||||||||||||||||||||||||||||||||
| + Fair value inventory step-up charge | 2,486 | — | — | — | 2,486 | 4,107 | — | — | — | 4,107 | |||||||||||||||||||||||||||||||||||||||||||||||||
| + Loss on early debt redemption | — | — | — | 8,561 | 8,561 | — | — | — | 8,421 | 8,421 | |||||||||||||||||||||||||||||||||||||||||||||||||
| + Termination of the U.S. pension plan | 6,293 | — | 1,782 | 1,613 | 9,688 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| + Corporate transaction indemnity | — | — | — | 3,900 | 3,900 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $147,418 | $166,781 | $95,295 | $(36,026) | $373,468 | $135,187 | $122,469 | $75,262 | $(33,416) | $299,502 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA margin | 29.8 | % | 31.7 | % | 29.8 | % | n/m | 27.9 | % | 30.3 | % | 27.9 | % | 27.7 | % | n/m | 25.9 | % | |||||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA interest coverage | 17.0 | 12.8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(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)
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
| June 30, | March 31, | June 30, | |||||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2021 | 2020 | |||||||||||||||||||||||||
| Cash flows from operating activities | $ | 136,272 | $ | 169,453 | $ | 109,324 | $ | 245,596 | $ | 254,213 | |||||||||||||||||||
| - Capital expenditures | 15,984 | 8,323 | 14,609 | 30,593 | 21,085 | ||||||||||||||||||||||||
| Free cash flow | $ | 120,288 | $ | 161,130 | $ | 94,715 | $ | 215,003 | $ | 233,128 | |||||||||||||||||||
Conference Call to be Broadcast over the Internet
IDEX will broadcast its second quarter earnings conference call over the Internet on Wednesday, July 28, 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 #13712090.
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 and the anticipated benefits of the Company’s acquisitions of both ABEL Pumps and Airtech, and are indicated by words or phrases such as “anticipates,” “estimates,” “plans,” “guidance,” “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 COVID-19 pandemic and the continuing effects of the COVID-19 pandemic (including the emergence of variant strains) 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 over 40 diverse businesses around the world part of the IDEX family. With more than 7,000 employees and manufacturing operations in more than 20 countries,
IDEX is a high-performing, global nearly $2.5 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 per share amounts)
(unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Net sales | $ | 685,947 | $ | 561,249 | $ | 1,337,983 | $ | 1,155,711 | |||||||||||||||
| Cost of sales | 379,875 | 326,449 | 739,288 | 648,955 | |||||||||||||||||||
| Gross profit | 306,072 | 234,800 | 598,695 | 506,756 | |||||||||||||||||||
| Selling, general and administrative expenses | 144,680 | 120,365 | 279,528 | 252,380 | |||||||||||||||||||
| Restructuring expenses and asset impairments | 3,136 | 3,841 | 5,364 | 3,841 | |||||||||||||||||||
| Operating income | 158,256 | 110,594 | 313,803 | 250,535 | |||||||||||||||||||
| Other (income) expense - net | 17,175 | 6,460 | 16,327 | 8,025 | |||||||||||||||||||
| Interest expense | 11,205 | 12,439 | 21,981 | 23,316 | |||||||||||||||||||
| Income before income taxes | 129,876 | 91,695 | 275,495 | 219,194 | |||||||||||||||||||
| Provision for income taxes | 27,697 | 20,831 | 60,644 | 46,332 | |||||||||||||||||||
| Net income | $ | 102,179 | $ | 70,864 | $ | 214,851 | $ | 172,862 | |||||||||||||||
| Net (income) loss attributable to noncontrolling interest | 16 | — | 52 | — | |||||||||||||||||||
| Net income attributable to IDEX | $ | 102,195 | $ | 70,864 | $ | 214,903 | $ | 172,862 | |||||||||||||||
| Earnings per Common Share: | |||||||||||||||||||||||
| Basic earnings per common share attributable to IDEX | $ | 1.34 | $ | 0.94 | $ | 2.83 | $ | 2.29 | |||||||||||||||
| Diluted earnings per common share attributable to IDEX | $ | 1.34 | $ | 0.93 | $ | 2.81 | $ | 2.27 | |||||||||||||||
| Share Data: | |||||||||||||||||||||||
| Basic weighted average common shares outstanding | 75,968 | 75,171 | 75,930 | 75,459 | |||||||||||||||||||
| Diluted weighted average common shares outstanding | 76,429 | 75,937 | 76,385 | 76,198 | |||||||||||||||||||
IDEX CORPORATION
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
| June 30, 2021 | December 31, 2020 | ||||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 714,380 | $ | 1,025,851 | |||||||
| Receivables - net | 356,469 | 293,146 | |||||||||
| Inventories | 360,079 | 289,910 | |||||||||
| Other current assets | 62,761 | 48,324 | |||||||||
| Total current assets | 1,493,689 | 1,657,231 | |||||||||
| Property, plant and equipment - net | 313,353 | 298,273 | |||||||||
| Goodwill and intangible assets | 2,837,156 | 2,311,137 | |||||||||
| Other noncurrent assets | 138,799 | 147,757 | |||||||||
| Total assets | $ | 4,782,997 | $ | 4,414,398 | |||||||
| Liabilities and equity | |||||||||||
| Current liabilities | |||||||||||
| Trade accounts payable | $ | 178,796 | $ | 151,993 | |||||||
| Accrued expenses | 230,426 | 208,828 | |||||||||
| Short-term borrowings | 41 | 88 | |||||||||
| Dividends payable | 41,096 | 38,149 | |||||||||
| Total current liabilities | 450,359 | 399,058 | |||||||||
| Long-term borrowings | 1,189,828 | 1,044,354 | |||||||||
| Other noncurrent liabilities | 469,946 | 430,660 | |||||||||
| Total liabilities | 2,110,133 | 1,874,072 | |||||||||
| Shareholders' equity | 2,672,796 | 2,540,203 | |||||||||
| Noncontrolling interest | 68 | 123 | |||||||||
| Total equity | 2,672,864 | 2,540,326 | |||||||||
| Total liabilities and equity | $ | 4,782,997 | $ | 4,414,398 | |||||||
IDEX CORPORATION
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
| Six Months Ended June 30, | |||||||||||
| 2021 | 2020 | ||||||||||
| Cash flows from operating activities | |||||||||||
| Net income | $ | 214,851 | $ | 172,862 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Asset impairments | 226 | — | |||||||||
| Depreciation and amortization | 21,480 | 20,591 | |||||||||
| Amortization of intangible assets | 24,513 | 20,032 | |||||||||
| Amortization of debt issuance expenses | 961 | 976 | |||||||||
| Share-based compensation expense | 13,245 | 13,665 | |||||||||
| Deferred income taxes | (13,982) | 2,421 | |||||||||
| Non-cash interest expense associated with forward starting swaps | 3,275 | 4,284 | |||||||||
| Termination of the U.S. pension plan | 9,688 | — | |||||||||
| Changes in (net of the effect from acquisitions): | |||||||||||
| Receivables | (46,257) | 34,253 | |||||||||
| Inventories | (20,936) | (9,529) | |||||||||
| Other current assets | 125 | (18,421) | |||||||||
| Trade accounts payable | 22,569 | (6,842) | |||||||||
| Deferred revenue | 15,502 | 20,346 | |||||||||
| Accrued expenses | 1,217 | (3,084) | |||||||||
| Other - net | (881) | 2,659 | |||||||||
| Net cash flows provided by operating activities | 245,596 | 254,213 | |||||||||
| Cash flows from investing activities | |||||||||||
| Purchases of property, plant and equipment | (30,593) | (21,085) | |||||||||
| Acquisition of businesses, net of cash acquired | (575,606) | (120,839) | |||||||||
| Note receivable from collaborative partner | (4,200) | — | |||||||||
| Proceeds from disposal of fixed assets | 242 | 2,114 | |||||||||
| Other - net | 905 | (636) | |||||||||
| Net cash flows used in investing activities | (609,252) | (140,446) | |||||||||
| Cash flows from financing activities | |||||||||||
| Borrowings under revolving credit facilities | — | 150,000 | |||||||||
| Proceeds from issuance of 3.0% Senior Notes | — | 499,100 | |||||||||
| Proceeds from issuance of 2.625% Senior Notes | 499,380 | — | |||||||||
| Payment of 4.5% Senior Notes | — | (300,000) | |||||||||
| Payment of 4.2% Senior Notes | (350,000) | — | |||||||||
| Payments under revolving credit facilities | — | (150,000) | |||||||||
| Payment of make-whole redemption premium | (6,659) | (6,756) | |||||||||
| Debt issuance costs | (4,611) | (4,166) | |||||||||
| Dividends paid | (79,242) | (76,498) | |||||||||
| Proceeds from stock option exercises | 10,687 | 13,111 | |||||||||
| Repurchases of common stock | — | (110,342) | |||||||||
| Shares surrendered for tax withholding | (5,534) | (12,148) | |||||||||
| Other - net | (60) | (251) | |||||||||
| Net cash flows provided by financing activities | 63,961 | 2,050 | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | (11,776) | (2,050) | |||||||||
| Net (decrease) increase in cash | (311,471) | 113,767 | |||||||||
| Cash and cash equivalents at beginning of year | 1,025,851 | 632,581 | |||||||||
| Cash and cash equivalents at end of period | $ | 714,380 | $ | 746,348 | |||||||
IDEX CORPORATION
Company and Segment Financial Information - Reported
(dollars in thousands)
(unaudited)
Three Months Ended June 30, (a) | Six Months Ended June 30, (a) | |||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
| Fluid & Metering Technologies | ||||||||||||||||||||||||||
| Net sales | $ | 251,277 | $ | 219,112 | $ | 494,642 | $ | 445,973 | ||||||||||||||||||
Operating income (b) | 63,467 | 50,938 | 126,364 | 117,709 | ||||||||||||||||||||||
| Operating margin | 25.3 | % | 23.2 | % | 25.5 | % | 26.4 | % | ||||||||||||||||||
EBITDA(c) | $ | 65,845 | $ | 57,829 | $ | 135,786 | $ | 129,232 | ||||||||||||||||||
EBITDA margin(c) | 26.2 | % | 26.4 | % | 27.5 | % | 29.0 | % | ||||||||||||||||||
| Depreciation and amortization | $ | 7,953 | $ | 6,809 | $ | 15,006 | $ | 12,207 | ||||||||||||||||||
| Capital expenditures | 5,004 | 1,794 | 8,284 | 6,322 | ||||||||||||||||||||||
| Health & Science Technologies | ||||||||||||||||||||||||||
| Net sales | $ | 275,012 | $ | 215,668 | $ | 525,381 | $ | 439,727 | ||||||||||||||||||
Operating income (b) | 75,963 | 48,007 | 142,613 | 100,650 | ||||||||||||||||||||||
| Operating margin | 27.6 | % | 22.3 | % | 27.1 | % | 22.9 | % | ||||||||||||||||||
EBITDA(c) | $ | 88,206 | $ | 57,452 | $ | 165,714 | $ | 121,285 | ||||||||||||||||||
EBITDA margin(c) | 32.1 | % | 26.6 | % | 31.5 | % | 27.6 | % | ||||||||||||||||||
| Depreciation and amortization | $ | 12,534 | $ | 9,917 | $ | 23,047 | $ | 20,576 | ||||||||||||||||||
| Capital expenditures | 9,565 | 4,955 | 18,694 | 10,284 | ||||||||||||||||||||||
| Fire & Safety/Diversified Products | ||||||||||||||||||||||||||
| Net sales | $ | 160,812 | $ | 127,076 | $ | 320,296 | $ | 271,400 | ||||||||||||||||||
Operating income (b) | 42,797 | 28,837 | 87,357 | 66,874 | ||||||||||||||||||||||
| Operating margin | 26.6 | % | 22.7 | % | 27.3 | % | 24.6 | % | ||||||||||||||||||
EBITDA(c) | $ | 44,594 | $ | 32,510 | $ | 93,297 | $ | 74,621 | ||||||||||||||||||
EBITDA margin(c) | 27.7 | % | 25.6 | % | 29.1 | % | 27.5 | % | ||||||||||||||||||
| Depreciation and amortization | $ | 3,851 | $ | 3,796 | $ | 7,723 | $ | 7,555 | ||||||||||||||||||
| Capital expenditures | 1,390 | 1,310 | 3,159 | 4,194 | ||||||||||||||||||||||
| Corporate Office and Eliminations | ||||||||||||||||||||||||||
| Intersegment sales eliminations | $ | (1,154) | $ | (607) | $ | (2,336) | $ | (1,389) | ||||||||||||||||||
Operating income (b) | (23,971) | (17,188) | (42,531) | (34,698) | ||||||||||||||||||||||
EBITDA(c) | (33,115) | (23,031) | (51,328) | (42,005) | ||||||||||||||||||||||
Depreciation and amortization (d) | 111 | 104 | 217 | 285 | ||||||||||||||||||||||
| Capital expenditures | 25 | 264 | 456 | 285 | ||||||||||||||||||||||
| Company | ||||||||||||||||||||||||||
| Net sales | $ | 685,947 | $ | 561,249 | $ | 1,337,983 | $ | 1,155,711 | ||||||||||||||||||
| Operating income | 158,256 | 110,594 | 313,803 | 250,535 | ||||||||||||||||||||||
| Operating margin | 23.1 | % | 19.7 | % | 23.5 | % | 21.7 | % | ||||||||||||||||||
EBITDA(c) | $ | 165,530 | $ | 124,760 | $ | 343,469 | $ | 283,133 | ||||||||||||||||||
EBITDA margin(c) | 24.1 | % | 22.2 | % | 25.7 | % | 24.5 | % | ||||||||||||||||||
Depreciation and amortization (d) | $ | 24,449 | $ | 20,626 | $ | 45,993 | $ | 40,623 | ||||||||||||||||||
| Capital expenditures | 15,984 | 8,323 | 30,593 | 21,085 | ||||||||||||||||||||||
IDEX CORPORATION
Company and Segment Financial Information - Adjusted
(dollars in thousands)
(unaudited)
Three Months Ended June 30, (a) | Six Months Ended June 30, (a) | |||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
| Fluid & Metering Technologies | ||||||||||||||||||||||||||
| Net sales | $ | 251,277 | $ | 219,112 | $ | 494,642 | $ | 445,973 | ||||||||||||||||||
Adjusted operating income (b)(c) | 67,199 | 56,893 | 131,703 | 123,664 | ||||||||||||||||||||||
Adjusted operating margin(c) | 26.7 | % | 26.0 | % | 26.6 | % | 27.7 | % | ||||||||||||||||||
Adjusted EBITDA(c) | $ | 75,870 | $ | 63,784 | $ | 147,418 | $ | 135,187 | ||||||||||||||||||
Adjusted EBITDA margin(c) | 30.2 | % | 29.1 | % | 29.8 | % | 30.3 | % | ||||||||||||||||||
| Depreciation and amortization | $ | 7,953 | $ | 6,809 | $ | 15,006 | $ | 12,207 | ||||||||||||||||||
| Capital expenditures | 5,004 | 1,794 | 8,284 | 6,322 | ||||||||||||||||||||||
| Health & Science Technologies | ||||||||||||||||||||||||||
| Net sales | $ | 275,012 | $ | 215,668 | $ | 525,381 | $ | 439,727 | ||||||||||||||||||
Adjusted operating income (b)(c) | 76,405 | 49,191 | 143,680 | 101,834 | ||||||||||||||||||||||
Adjusted operating margin(c) | 27.8 | % | 22.8 | % | 27.3 | % | 23.2 | % | ||||||||||||||||||
Adjusted EBITDA(c) | $ | 88,648 | $ | 58,636 | $ | 166,781 | $ | 122,469 | ||||||||||||||||||
Adjusted EBITDA margin(c) | 32.2 | % | 27.2 | % | 31.7 | % | 27.9 | % | ||||||||||||||||||
| Depreciation and amortization | $ | 12,534 | $ | 9,917 | $ | 23,047 | $ | 20,576 | ||||||||||||||||||
| Capital expenditures | 9,565 | 4,955 | 18,694 | 10,284 | ||||||||||||||||||||||
| Fire & Safety/Diversified Products | ||||||||||||||||||||||||||
| Net sales | $160,812 | $ | 127,076 | $ | 320,296 | $ | 271,400 | |||||||||||||||||||
Adjusted operating income (b)(c) | 42,916 | 29,478 | 87,573 | 67,515 | ||||||||||||||||||||||
Adjusted operating margin(c) | 26.7 | % | 23.2 | % | 27.3 | % | 24.9 | % | ||||||||||||||||||
Adjusted EBITDA(c) | $ | 46,495 | $ | 33,151 | $ | 95,295 | $ | 75,262 | ||||||||||||||||||
Adjusted EBITDA margin(c) | 28.9 | % | 26.1 | % | 29.8 | % | 27.7 | % | ||||||||||||||||||
| Depreciation and amortization | $ | 3,851 | $ | 3,796 | $ | 7,723 | $ | 7,555 | ||||||||||||||||||
| Capital expenditures | 1,390 | 1,310 | 3,159 | 4,194 | ||||||||||||||||||||||
| Corporate Office and Eliminations | ||||||||||||||||||||||||||
| Intersegment sales eliminations | $(1,154) | $ | (607) | $(2,336) | $ | (1,389) | ||||||||||||||||||||
Adjusted operating income (b)(c) | (19,406) | (17,020) | (37,403) | (34,530) | ||||||||||||||||||||||
Adjusted EBITDA(c) | (18,376) | (14,442) | (36,026) | (33,416) | ||||||||||||||||||||||
Depreciation and amortization(d) | 111 | 104 | 217 | 285 | ||||||||||||||||||||||
| Capital expenditures | 25 | 264 | 456 | 285 | ||||||||||||||||||||||
| Company | ||||||||||||||||||||||||||
| Net sales | $ | 685,947 | $ | 561,249 | $1,337,983 | $1,155,711 | ||||||||||||||||||||
Adjusted operating income(c) | 167,114 | 118,542 | 325,553 | 258,483 | ||||||||||||||||||||||
Adjusted operating margin(c) | 24.4 | % | 21.1 | % | 24.3 | % | 22.4 | % | ||||||||||||||||||
Adjusted EBITDA(c) | $ | 192,637 | $ | 141,129 | $ | 373,468 | $ | 299,502 | ||||||||||||||||||
Adjusted EBITDA margin(c) | 28.1 | % | 25.1 | % | 27.9 | % | 25.9 | % | ||||||||||||||||||
Depreciation and amortization (d) | $ | 24,449 | $ | 20,626 | $ | 45,993 | $ | 40,623 | ||||||||||||||||||
| Capital expenditures | 15,984 | 8,323 | 30,593 | 21,085 | ||||||||||||||||||||||
| (a) | Three and six month data includes the results of both the ABEL Pumps acquisition (March 2021) and the Flow MD acquisition (February 2020) in the Fluid & Metering Technologies segment from the date of acquisition. Three and six month data also includes the results of CiDRA Precision Services (March 2021) in the Health & Science 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) | 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 Second Quarter 2021 Earnings July 28, 2021
2IDEX Proprietary & Confidential Agenda IDEX Business Overview • IDEX Overview • Growth Investments • Orders & End Market Update Financials • Q2 Performance • Operating Profit 2021 Guidance IDEX Difference Update Q&A
3IDEX Proprietary & Confidential Replay Information • Dial toll–free: 877.660.6853 • International: 201.612.7415 • Conference ID: #13712090 • 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 six-month period ending June 30, 2021, which is available on our website.
5IDEX Proprietary & Confidential Business Update
6IDEX Proprietary & Confidential IDEX Overview Execution Within a Disruptive Environment • Continue to overcome material shortages, logistics hurdles, staffing challenges • Increased for our short cycle businesses in the quarter • Disruptions hit plateau – don’t see getting worse, but will take time to improve Strong Commercial Performance • Record orders and backlog • All segments above 2019 order levels • Industrial projects next phase of growth Attacking Price Capture & Productivity • Aggressive price capture as a response to sharp inflation • Core productivity = critical • Facility rationalization in Energy
7IDEX Proprietary & Confidential Growth Investments - Increasing Inorganic Organic Doubling Emerging Markets Capacity Digitization Build Out Continued Growth and Productivity Expanded expertise in specialized air moving technologies Adding complementary capabilities in reciprocating positive displacement pumps
8 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 (20%) 8% 19% 4% 4% Record Order Performance Continued strong orders across all segments Sequential Trend vs. 2Q 2020 vs 2Q 2019 FMT 32% 6% HST 43% 23% FSD 46% 11% Total 39% 13% Organic Orders V%
9IDEX Proprietary & Confidential 2021 Market Outlook FLUID & METERING TECHNOLOGY HEALTH & SCIENCE TECHNOLOGY FIRE & SAFETY / DIVERSIFIED >0% vs pre-pandemic 2021 Q2 REVENUE $251M $275M $161M % OF TOTAL 37% 40% 23% Industrial Agriculture Water Energy Chemical Semiconductor Food / Pharma Automotive Analytical Instrumentation Life Sciences Industrial Dispensing Automotive Industrial / Other Fire / Rescue <0% vs pre-pandemic
10IDEX Proprietary & Confidential Financials
11IDEX Proprietary & Confidential IDEX Q2 Financial Performance Record Q2 order growth and strong rebound from pandemic amid supply chain challenges $1.10 $1.61 Q2 2020 2021 21.1% 24.4% Q2 2020 2021 $161 $120 Q2 2020 2021 (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 ($1.8M in Q2 2021 and $4.1M in Q2 2020), restructuring expenses ($3.1M in Q2 2021 and $3.8M in Q2 2020), and corporate transaction indemnity ($3.9M in Q2 2021). Additionally, EPS adjusted for the termination of U.S. pension plan ($9.7M in Q2 2021) and loss on early debt redemption ($8.6M in Q2 2021 and $8.4M in Q2 2020). Organic: 17% increase 46% increase 330 bps increase 25% decrease $561 $686 Q2 2020 2021
12IDEX Proprietary & Confidential 41 10 3 5 (11) 2Q'20 Adj Organic Flow Thru Price/ Productivity/ Inflation Mix Discretionary / Reinvestment Acq/FX 2Q'21 Adj 119 167 Q2 Adjusted Operating Income Walk Post-COVID volume rebound tempered by supply chain pressure and reinvestment (Dollars in millions) Flow through @ PY GM% 43% Organic flow through ex Acq / FX 45% Total flow through 39%
13IDEX Proprietary & Confidential 2021 Guidance Summary Q3 2021 EPS estimate range: $1.57 – $1.61 Organic revenue growth: 14% - 16% Operating margin: ~24.5% Tax rate: ~23% FX impact: ~1.0% topline benefit based on June 30, 2021 FX rates Corporate costs: ~$21 million FY 2021 EPS estimate range: $6.26 – $6.36 Organic revenue growth: 11% – 12% Operating margin: ~24.5% FX impact: : ~2.0% topline benefit based on June 30, 2021 FX rates Other modeling items: • Airtech acquisition to contribute ~$0.06 in 2H 2021 •Tax rate: ~23% •Cap Ex: $65M+ •Free cash flow will be approximately 110% - 115% of net income •Corporate costs: $77 million •EPS estimate excludes all future acquisitions and associated costs and any future restructuring expenses
14IDEX Proprietary & Confidential IDEX Difference Updates Solar Energy Investments • First project 1,314 rooftop panels in Germany • Will provide 30% of plant’s electricity needs Hired Chief Diversity, Equity and Inclusion Officer • Troy McIntosh joins from U.S. Cellular • Will build global roadmap and success measures for DE&I at IDEX • Reports directly to CEO European Flood Response • Employees impacted at Vetter in Germany • The spirit of IDEX – Colleagues volunteer • Pumps expertise put to work in recovery efforts
15IDEX Proprietary & Confidential Appendix
16IDEX Proprietary & Confidential Fluid & Metering Technologies $199 $278 Q2 2020 2021 $219 $251 Q2 2020 2021 Q2 Highlights: Strong industrial days rates, looking for projects to layer in Agriculture remains at record levels Energy and Chemical markets lag due to lack of investment and longer project cycles. Water has maintained as we continue to monitor municipal budgets Volume and price capture partly offset by increased inflation and reinvestment 70 bps increase (Dollars in millions) Orders Sales Operating Margin* Q2 Sales Mix: Organic 8% Acquisition 4% FX 3% Reported Sales 15% *Operating margin adjusted for fair value inventory step-up ($1.8M in Q2 2021 and $4.1M in Q2 2020) and restructuring expenses ($1.9M in Q2 2021 and $1.8M Q1 2020). Organic: 32% increase Organic: 8% increase 26.0% 26.7% Q2 2020 2021
17IDEX Proprietary & Confidential Health & Science Technologies Q2 Highlights: Scientific Fluidics & Optics driven by strength in analytical instrumentation and optics Gast industrial recovered to 2019 levels MPT experiencing continued strength in Food and Pharma markets Sealing Solutions saw continued strengthening in the Semicon and Automotive Strong volume and price capture partly offset by inflation and reinvestment $198 $283 Q2 2020 2021 $216 $275 Q2 2020 2021 Organic: 43% increase 500 bps increase (Dollars in millions) Orders Sales Operating Margin* *Operating margin adjusted for restructuring expenses ($0.4M in Q2 2021 and $1.2M Q2 2020). Organic: 25% increase 22.8% 27.8% Q2 2020 2021 Q2 Sales Mix: Organic 25% Divestiture (1%) FX 4% Reported Sales 28%
18IDEX Proprietary & Confidential Fire & Safety / Diversified Products Q2 Highlights: Fire & Rescue recovery slowed by lack of large tenders and continued slow down in EM Band-IT strong rebound in Automotive, Energy, and Industrial Dispensing solid recovery driven demand within paint markets globally Volume and price capture partly offset by inflation and reinvestment $126 $191 Q2 2020 2021 $127 $161 Q2 2020 2021 Q2 Sales Mix: Organic 22% FX 5% Reported Sales 27% (Dollars in millions) Orders Sales Operating Margin* *Operating margin adjusted for restructuring expenses ($0.1M in Q2 2021 and $0.6M in Q2 2020). Organic: 46% increase Organic: 22% increase 350 bps increase 23.2% 26.7% Q2 2020 2021