Second Quarter 2022
Highlights
- Reported EPS of $1.81, up 35% and record adjusted EPS of $2.02,
up 15% vs. Q2 2021
- Orders of $839 million, up 12% overall and 7% organically vs.
Q2 2021
- Record sales of $796 million, up 16% overall and 12%
organically vs. Q2 2021
- Reported operating margin of 23.4%, up 30 basis points vs. Q2
2021
- Completed acquisition of KZValve on May 2, 2022
- Full year GAAP EPS guidance raised to $7.19 to $7.29 from prior
guidance of $6.87 to $7.00
- Full year adjusted EPS guidance raised to $7.88 to $7.98 from
prior guidance of $7.50 to $7.63
IDEX Corporation (NYSE: IEX) today announced its financial
results for the three month period ended June 30, 2022.
"IDEX delivered outstanding results in the second quarter,
closing out a record first half of the year," said Eric D.
Ashleman, IDEX Corporation Chief Executive Officer and President.
"In the second quarter, we achieved 12 percent organic sales
growth, our fifth straight quarter of double-digit organic growth
performance. We also delivered record adjusted EPS of $2.02, an
increase of 15%. Operating margin performance remains strong, and
we continue to invest in resources to drive innovation across our
portfolio."
"Capital deployment remains a top priority. We completed the
KZValve transaction, repurchased 475 thousand shares in the second
quarter, increased our dividend by 11 percent and continued to
invest capital to support organic growth. We have a healthy balance
sheet and will continue to put our capital to work."
2022 Outlook
Full year 2022 organic sales growth is projected to be
approximately 10 percent, with a 9 to 10 percent organic sales
increase in the third quarter of 2022 versus the prior year period.
The Company expects full year 2022 reported EPS attributable to
IDEX of $7.19 to $7.29 (adjusted EPS attributable to IDEX of $7.88
to $7.98) and third quarter 2022 reported EPS attributable to IDEX
of $1.80 to $1.85 (adjusted EPS attributable to IDEX of $1.98 to
$2.03).
Consolidated Results
Three Months Ended June
30,
(Dollars in millions, except per share
amounts)
2022
2021
Increase
(Decrease)
Net sales
$
796.1
$
686.0
$
110.1
Organic net sales growth*
12%
Operating income
186.6
158.3
28.3
Adjusted operating income*
189.8
167.2
22.6
Net income attributable to IDEX
138.2
102.2
36.0
Adjusted net income attributable to
IDEX*
153.6
133.6
20.0
Diluted EPS attributable to
IDEX
1.81
1.34
0.47
Adjusted diluted EPS attributable to
IDEX*
2.02
1.75
0.27
Adjusted EBITDA*
219.2
192.7
26.5
Cash flow from operating
activities
112.3
136.3
(24.0)
Free cash flow*
96.7
120.3
(23.6)
Gross margin
44.8%
44.6%
20 bps
Adjusted gross margin*
44.9%
44.9%
0 bps
Operating margin
23.4%
23.1%
30 bps
Adjusted operating margin*
23.8%
24.4%
(60) bps
Adjusted EBITDA margin*
27.5%
28.1%
(60) bps
*These are non-GAAP measures. See the
definitions of these non-GAAP measures in the section in this
release titled “Non-GAAP Measures of Financial Performance” and
reconciliations to their most directly comparable GAAP financial
measures in the reconciliation tables at the end of this
release.
Net Sales
Second quarter 2022 sales of $796.1 million reflected a 16
percent increase compared with the prior year period (+12 percent
organic, +7 percent acquisitions and -3 percent foreign currency
translation).
Gross Margin
Second quarter 2022 gross margin of 44.8 percent increased 20
basis points compared with the prior year period primarily due to
higher volume leverage and strong operational productivity together
with favorable price/cost, partially offset by higher
employee-related costs. Additionally, fair value inventory step-up
charges were higher in the prior year period. Adjusted gross
margin, which excludes the fair value inventory step-up charges,
was flat compared with the prior year period.
Operating Margin
Second quarter 2022 operating margin of 23.4 percent increased
30 basis points compared with the prior year period due to the
drivers discussed above, partially offset by higher discretionary
spending and resource investments. Additionally, the prior year
period included a charge related to recording a contingent reserve
for a Corporate transaction indemnity as well as higher
restructuring costs and fair value inventory step-up charges.
Adjusted operating margin, which excludes restructuring costs, fair
value inventory step-up charges and the Corporate transaction
indemnity, decreased 60 basis points. Incremental amortization of
$5.9 million related to the Airtech, Nexsight and KZValve
acquisitions unfavorably impacted adjusted operating margin by 80
basis points in second quarter 2022.
Net Income Attributable to IDEX
Second quarter 2022 net income attributable to IDEX increased
$36.0 million to $138.2 million, which resulted in EPS attributable
to IDEX of $1.81 per share. The second quarter 2022 effective tax
rate of 22.1 percent increased compared to the prior year period
effective tax rate of 21.3 percent due to a decrease in the excess
tax benefits related to share-based compensation. Adjusted EPS
attributable to IDEX, which reflects the impact of non-GAAP
adjustments, net of related taxes, was $2.02 per share, an increase
of 27 cents per share, or 15.4 percent, from the prior year
period.
Cash Flow
Second quarter 2022 cash from operations of $112.3 million was
down 17.6 percent compared with the prior year period primarily due
to increases in working capital, partially offset by higher
earnings. Accounts receivable increased as a result of higher
volume and inventories increased to support production amid supply
chain difficulties. Second quarter 2022 free cash flow of $96.7
million was 63.0 percent of adjusted net income attributable to
IDEX. Free cash flow as a percent of adjusted net income
attributable to IDEX now reflects the impact of excluding
acquisition-related intangible asset amortization, net of related
taxes, from adjusted net income attributable to IDEX for all
periods presented.
Segment Highlights
Fluid & Metering Technologies
Three Months Ended June
30,
(Dollars in millions)
2022
2021
Increase
(Decrease)
Net sales
$
299.9
$
251.3
$
48.6
Operating income
82.9
63.5
19.4
Operating margin
27.7%
25.3%
240 bps
Adjusted operating income*
$
85.0
$
67.2
$
17.8
Adjusted operating margin*
28.4%
26.7%
170 bps
*These are non-GAAP measures. See the
definitions of these non-GAAP measures in the section in this
release titled “Non-GAAP Measures of Financial Performance” and
reconciliations to their most directly comparable GAAP financial
measures in the reconciliation tables at the end of this
release.
- Second quarter 2022 sales of $299.9 million reflected a 19
percent increase compared with the second quarter of 2021 (+13
percent organic, +9 percent acquisitions and -3 percent foreign
currency translation).
- Second quarter 2022 operating margin was 27.7 percent, up 240
basis points compared with the prior year period. This increase was
primarily due to higher volume leverage and strong operational
productivity together with favorable price/cost, partially offset
by increases in employee-related costs, discretionary spending and
resource investments. Additionally, restructuring costs and fair
value inventory step-up charges were higher in the prior year
period. Adjusted operating margin, which excludes restructuring
costs and fair value inventory step-up charges, increased 170 basis
points. Incremental amortization of $2.0 million related to the
Nexsight and KZValve acquisitions unfavorably impacted adjusted
operating margin by 60 basis points in second quarter 2022.
Health & Science Technologies
Three Months Ended June
30,
(Dollars in millions)
2022
2021
Increase
(Decrease)
Net sales
$
326.0
$
275.0
$
51.0
Operating income
86.5
76.0
10.5
Operating margin
26.5%
27.6%
(110) bps
Adjusted operating income*
$
86.6
$
76.5
$
10.1
Adjusted operating margin*
26.5%
27.8%
(130) bps
*These are non-GAAP measures. See the
definitions of these non-GAAP measures in the section in this
release titled “Non-GAAP Measures of Financial Performance” and
reconciliations to their most directly comparable GAAP financial
measures in the reconciliation tables at the end of this
release.
- Second quarter 2022 sales of $326.0 million reflected a 19
percent increase compared with the second quarter of 2021 (+12
percent organic, +10 percent acquisitions and -3 percent foreign
currency translation).
- Second quarter 2022 operating margin was 26.5 percent, down 110
basis points compared with the prior year period as higher volume
leverage and favorable price/cost were more than offset by the
dilutive impact of amortization related to the acquisition of
Airtech Group, Inc., US Valve Corporation and related entities
("Airtech") as well as higher employee-related costs, resource
investments and discretionary spending. Adjusted operating margin,
which excludes restructuring costs, decreased 130 basis points.
Incremental amortization of $3.9 million related to the Airtech
acquisition unfavorably impacted adjusted operating margin by 130
basis points in second quarter 2022.
Fire & Safety/Diversified Products
Three Months Ended June
30,
(Dollars in millions)
2022
2021
Increase (Decrease)
Net sales
$
171.2
$
160.8
$
10.4
Operating income
39.9
42.8
(2.9)
Operating margin
23.3%
26.6%
(330) bps
Adjusted operating income*
$
40.9
$
42.9
$
(2.0)
Adjusted operating margin*
23.9%
26.7%
(280) bps
*These are non-GAAP measures. See the
definitions of these non-GAAP measures in the section in this
release titled “Non-GAAP Measures of Financial Performance” and
reconciliations to their most directly comparable GAAP financial
measures in the reconciliation tables at the end of this
release.
- Second quarter 2022 sales of $171.2 million reflected a 7
percent increase compared with the second quarter of 2021 (+11
percent organic and -4 percent foreign currency translation).
- Second quarter 2022 operating margin was 23.3 percent, down 330
basis points compared with the prior year period primarily due to
higher employee-related costs and discretionary spending as well as
compressed price/cost due to long-term original equipment
manufacturer contracts, partially offset by higher volume. Adjusted
operating margin, which excludes restructuring costs, decreased 280
basis points.
Corporate Costs
Corporate costs included in operating income were $22.7 million
in the second quarter of 2022, a decrease of $1.3 million over the
prior year period, primarily due to the Corporate transaction
indemnity and restructuring costs recorded in 2021 that did not
reoccur in 2022, partially offset by higher variable compensation
expenses. Corporate costs included in adjusted operating income,
which excludes restructuring costs and the Corporate transaction
indemnity, increased by $3.3 million.
Acquisitions
On May 2, 2022, the Company acquired KZ CO. ("KZValve"). KZValve
is a leading manufacturer of electric valves and controllers used
primarily in agricultural applications. KZValve will augment and
expand IDEX's agricultural portfolio, complementing Banjo's current
fluid management solutions for these applications. Headquartered in
Greenwood, Nebraska, KZValve operates in the Company’s Agriculture
reporting unit within the Fluid & Metering Technologies ("FMT")
segment. KZValve was acquired for cash consideration of $120.2
million. The entire purchase was funded with cash on hand.
Conference Call to be Broadcast over
the Internet
IDEX will broadcast its second quarter earnings conference call
over the Internet on Wednesday, July 27, 2022 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 #13724804.
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 expected
earnings per share, and the assumptions underlying these
expectations, anticipated future acquisition behavior and capital
deployment, availability of cash and financing alternatives, the
intent to refinance or repay the 4.20% Senior Notes using the
available borrowing capacity of the Revolving Facility, the
anticipated benefits of the Company’s acquisitions, including the
acquisitions of Airtech Group, Inc., US Valve Corporation and
related entities (“Airtech”), Nexsight, LLC and its businesses
Envirosight, WinCan, MyTana and Pipeline Renewal Technologies
(“Nexsight”), KZValve and ABEL Pumps, L.P. and certain of its
affiliates (“ABEL”), 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 impact of health epidemics and pandemics, including
the COVID-19 pandemic, and the impact of related governmental
actions, on the Company’s ability to operate its business and
facilities, on its customers, on supply chains and on the U.S. and
global economy generally; economic and political consequences
resulting from terrorist attacks and wars, including Russia's
invasion of Ukraine and the global response to this invasion,
which, along with the ongoing effects of the COVID-19 pandemic,
could have an adverse impact on the Company's business by creating
disruptions in the global supply chain and by potentially having an
adverse impact on the global economy; levels of industrial activity
and economic conditions in the U.S. and other countries around the
world, including uncertainties in the financial markets; pricing
pressures, including inflation and rising interest rates, 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; 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; supply chain backlogs, including risks
affecting component availability, labor inefficiencies and freight
logistical challenges; market conditions and material costs; risks
related to environmental, social and corporate governance ("ESG")
issues, including those related to climate change and
sustainability; 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”) and the other risks
discussed in the Company’s filings with the SEC. The
forward-looking statements included here are only made as of the
date of this news release, and management undertakes no obligation
to publicly update them to reflect subsequent events or
circumstances, except as may be required by law. Investors are
cautioned not to rely unduly on forward-looking statements when
evaluating the information presented here.
About IDEX
IDEX (NYSE: IEX) makes thousands of products and
mission-critical components that improve everyday life all around
you. If you enjoy chocolate, it quite possibly passed through a
Viking® internal gear pump at the candy factory. If you were ever
in a car accident, emergency workers may have used the Hurst Jaws
of Life® rescue tool to save your life. If your doctor ordered a
DNA test to predict your risk of disease or determine a course of
treatment, the lab may have used equipment containing components
made by IDEX Health & Science. Founded in 1988 with three
small, entrepreneurial manufacturing companies, we’re proud to say
that we now call over 45 diverse businesses around the world part
of the IDEX family. With more than 8,000 employees and
manufacturing operations in more than 20 countries, IDEX is a
high-performing, global company with nearly $2.8 billion in annual
sales, 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 Income
(in millions, except per share
amounts)
(unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2022
2021
2022
2021
Net sales
$
796.1
$
686.0
$
1,547.2
$
1,338.0
Cost of sales
439.2
379.9
847.8
739.3
Gross profit
356.9
306.1
699.4
598.7
Selling, general and administrative
expenses
167.5
144.6
321.8
279.5
Restructuring expenses and asset
impairments
2.8
3.2
3.4
5.4
Operating income
186.6
158.3
374.2
313.8
Other expense (income) - net
—
17.2
(2.3
)
16.4
Interest expense
9.5
11.2
19.0
21.9
Income before income taxes
177.1
129.9
357.5
275.5
Provision for income taxes
39.0
27.7
79.5
60.6
Net income
$
138.1
$
102.2
$
278.0
$
214.9
Net loss attributable to noncontrolling
interest
0.1
—
0.2
—
Net income attributable to IDEX
$
138.2
$
102.2
$
278.2
$
214.9
Earnings per Common Share:
Basic earnings per common share
attributable to IDEX
$
1.82
$
1.34
$
3.66
$
2.83
Diluted earnings per common share
attributable to IDEX
$
1.81
$
1.34
$
3.65
$
2.81
Share Data:
Basic weighted average common shares
outstanding
75.8
76.0
76.0
75.9
Diluted weighted average common shares
outstanding
76.1
76.4
76.2
76.4
IDEX CORPORATION
Condensed Consolidated Balance
Sheets
(in millions)
(unaudited)
June 30, 2022
December 31, 2021
Assets
Current assets
Cash and cash equivalents
$
557.8
$
855.4
Receivables - net
425.7
356.4
Inventories
457.4
370.4
Other current assets
110.4
95.8
Total current assets
1,551.3
1,678.0
Property, plant and equipment -
net
323.3
327.3
Goodwill and intangible assets
2,893.6
2,765.0
Other noncurrent assets
144.6
146.9
Total assets
$
4,912.8
$
4,917.2
Liabilities and equity
Current liabilities
Trade accounts payable
$
214.4
$
178.8
Accrued expenses
254.0
259.8
Dividends payable
45.4
41.4
Total current liabilities
513.8
480.0
Long-term borrowings
1,190.9
1,190.3
Other noncurrent liabilities
420.1
443.8
Total liabilities
2,124.8
2,114.1
Shareholders' equity
2,788.2
2,803.1
Noncontrolling interest
(0.2
)
—
Total equity
2,788.0
2,803.1
Total liabilities and equity
$
4,912.8
$
4,917.2
IDEX CORPORATION
Condensed Consolidated Statements
of Cash Flows
(in millions)
(unaudited)
Six Months Ended June
30,
2022
2021
Cash flows from operating
activities
Net income
$
278.0
$
214.9
Adjustments to reconcile net income to
net cash provided by operating activities:
Gains on sales of assets
(2.6
)
—
Asset impairments
0.2
0.2
Depreciation and amortization
24.7
21.5
Amortization of intangible
assets
32.2
24.5
Amortization of debt issuance
expenses
0.8
1.0
Share-based compensation
expense
13.5
10.5
Deferred income taxes
(0.2
)
(14.0
)
Non-cash interest expense associated
with forward starting swaps
—
3.3
Termination of the U.S. pension
plan
—
9.7
Changes in (net of the effect from
acquisitions/divestitures and foreign exchange):
Receivables
(68.7
)
(46.3
)
Inventories
(84.5
)
(20.9
)
Other current assets
(17.8
)
0.1
Trade accounts payable
36.2
22.6
Deferred revenue
1.3
15.5
Accrued expenses
(22.5
)
2.3
Other - net
1.4
0.7
Net cash flows provided by operating
activities
192.0
245.6
Cash flows from investing
activities
Purchases of property, plant and
equipment
(31.7
)
(30.6
)
Acquisition of businesses, net of cash
acquired
(234.9
)
(575.6
)
Note receivable from collaborative
partner
—
(4.2
)
Proceeds from disposal of fixed
assets
6.6
0.2
Other - net
(0.1
)
0.9
Net cash flows used in investing
activities
(260.1
)
(609.3
)
Cash flows from financing
activities
Proceeds from issuance of long-term
borrowings
—
499.4
Payment of long-term borrowings
—
(350.0
)
Payment of make-whole redemption
premium
—
(6.7
)
Debt issuance costs
—
(4.6
)
Dividends paid
(86.9
)
(79.2
)
Proceeds from stock option
exercises
5.2
10.7
Repurchases of common stock
(110.4
)
—
Shares surrendered for tax
withholding
(4.9
)
(5.5
)
Other - net
(0.1
)
(0.1
)
Net cash flows (used in) provided by
financing activities
(197.1
)
64.0
Effect of exchange rate changes on cash
and cash equivalents
(32.4
)
(11.8
)
Net decrease in cash
(297.6
)
(311.5
)
Cash and cash equivalents at beginning
of year
855.4
1,025.9
Cash and cash equivalents at end of
period
$
557.8
$
714.4
IDEX CORPORATION
Company and Segment Financial
Information - Reported
(dollars in millions)
(unaudited)
Three Months Ended June 30,
(a)
Six Months Ended June 30,
(a)
2022
2021
2022
2021
Fluid & Metering
Technologies
Net sales
$
299.9
$
251.3
$
571.9
$
494.6
Operating income (b)
82.9
63.5
163.3
126.4
Operating margin
27.7
%
25.3
%
28.6
%
25.5
%
EBITDA(c)
$
92.9
$
65.8
$
182.5
$
135.8
EBITDA margin(c)
31.0
%
26.2
%
31.9
%
27.5
%
Depreciation and amortization
$
9.8
$
7.9
$
17.4
$
15.0
Capital expenditures
4.8
5.0
9.7
8.3
Health & Science
Technologies
Net sales
$
326.0
$
275.0
$
641.2
$
525.4
Operating income (b)
86.5
76.0
170.1
142.6
Operating margin
26.5
%
27.6
%
26.5
%
27.1
%
EBITDA(c)
$
103.5
$
88.3
$
203.3
$
165.8
EBITDA margin(c)
31.8
%
32.1
%
31.7
%
31.5
%
Depreciation and amortization
$
15.8
$
12.6
$
31.8
$
23.1
Capital expenditures
7.3
9.6
16.5
18.7
Fire & Safety/Diversified
Products
Net sales
$
171.2
$
160.8
$
335.9
$
320.3
Operating income (b)
39.9
42.8
80.4
87.4
Operating margin
23.3
%
26.6
%
23.9
%
27.3
%
EBITDA(c)
$
44.1
$
44.5
$
90.0
$
93.3
EBITDA margin(c)
25.8
%
27.7
%
26.8
%
29.1
%
Depreciation and amortization
$
3.7
$
3.8
$
7.5
$
7.7
Capital expenditures
3.3
1.4
5.3
3.2
Corporate Office and
Eliminations
Intersegment sales eliminations
$
(1.0
)
$
(1.1
)
$
(1.8
)
$
(2.3
)
Operating income (b)
(22.7
)
(24.0
)
(39.6
)
(42.6
)
EBITDA(c)
(24.5
)
(33.1
)
(42.4
)
(51.5
)
Depreciation and amortization
(d)
0.1
0.1
0.2
0.2
Capital expenditures
0.2
—
0.2
0.4
Company
Net sales
$
796.1
$
686.0
$
1,547.2
$
1,338.0
Operating income
186.6
158.3
374.2
313.8
Operating margin
23.4
%
23.1
%
24.2
%
23.5
%
EBITDA(c)
$
216.0
$
165.5
$
433.4
$
343.4
EBITDA margin(c)
27.1
%
24.1
%
28.0
%
25.7
%
Depreciation and amortization
(d)
$
29.4
$
24.4
$
56.9
$
46.0
Capital expenditures
15.6
16.0
31.7
30.6
IDEX CORPORATION
Company and Segment Financial
Information - Adjusted
(dollars in millions)
(unaudited)
Three Months Ended June 30,
(a)
Six Months Ended June 30,
(a)
2022
2021
2022
2021
Fluid & Metering
Technologies
Net sales
$
299.9
$
251.3
$
571.9
$
494.6
Adjusted operating income
(b)(c)
85.0
67.2
165.4
131.7
Adjusted operating margin(c)
28.4
%
26.7
%
28.9
%
26.6
%
Adjusted EBITDA(c)
$
95.0
$
75.8
$
183.4
$
147.4
Adjusted EBITDA margin(c)
31.7
%
30.2
%
32.1
%
29.8
%
Depreciation and amortization
$
9.8
$
7.9
$
17.4
$
15.0
Capital expenditures
4.8
5.0
9.7
8.3
Health & Science
Technologies
Net sales
$
326.0
$
275.0
$
641.2
$
525.4
Adjusted operating income
(b)(c)
86.6
76.5
170.2
143.7
Adjusted operating margin(c)
26.5
%
27.8
%
26.5
%
27.3
%
Adjusted EBITDA(c)
$
103.6
$
88.8
$
203.4
$
166.9
Adjusted EBITDA margin(c)
31.8
%
32.2
%
31.7
%
31.7
%
Depreciation and amortization
$
15.8
$
12.6
$
31.8
$
23.1
Capital expenditures
7.3
9.6
16.5
18.7
Fire & Safety/Diversified
Products
Net sales
$
171.2
$
160.8
$
335.9
$
320.3
Adjusted operating income
(b)(c)
40.9
42.9
81.4
87.6
Adjusted operating margin(c)
23.9
%
26.7
%
24.2
%
27.3
%
Adjusted EBITDA(c)
$
45.1
$
46.4
$
89.5
$
95.3
Adjusted EBITDA margin(c)
26.4
%
28.9
%
26.6
%
29.8
%
Depreciation and amortization
$
3.7
$
3.8
$
7.5
$
7.7
Capital expenditures
3.3
1.4
5.3
3.2
Corporate Office and
Eliminations
Intersegment sales eliminations
$
(1.0
)
$
(1.1
)
$
(1.8
)
$
(2.3
)
Adjusted operating income
(b)(c)
(22.7
)
(19.4
)
(39.6
)
(37.4
)
Adjusted EBITDA(c)
(24.5
)
(18.3
)
(42.4
)
(36.1
)
Depreciation and
amortization(d)
0.1
0.1
0.2
0.2
Capital expenditures
0.2
—
0.2
0.4
Company
Net sales
$
796.1
$
686.0
$
1,547.2
$
1,338.0
Adjusted operating income(c)
189.8
167.2
377.4
325.6
Adjusted operating margin(c)
23.8
%
24.4
%
24.4
%
24.3
%
Adjusted EBITDA(c)
$
219.2
$
192.7
$
433.9
$
373.5
Adjusted EBITDA margin(c)
27.5
%
28.1
%
28.0
%
27.9
%
Depreciation and amortization
(d)
$
29.4
$
24.4
$
56.9
$
46.0
Capital expenditures
15.6
16.0
31.7
30.6
(a)
Three and six month data include the
results of the ABEL acquisition (March 2021), the Nexsight
acquisition (February 2022) and the KZValve acquisition (May 2022)
in the FMT segment and the Airtech acquisition (June 2021) in the
Health & Science Technologies ("HST") segment from the date of
acquisition. Six month data also includes the results of CiDRA
Precision Services (March 2021) in the HST 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 below.
(d)
Depreciation and amortization exclude
amortization of debt issuance costs.
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, gains on sales of assets, the loss on early debt
redemption, the noncash loss related to the termination of the U.S.
pension plan, a charge related to recording a contingent reserve
for a Corporate transaction indemnity and acquisition-related
intangible asset amortization. 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. Due to rounding,
numbers presented throughout this and other documents may not add
up or recalculate precisely. 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 attributable to IDEX is calculated as net
income attributable to IDEX plus fair value inventory step-up
charges plus restructuring expenses and asset impairments less
gains on sales of assets 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 plus acquisition-related
intangible asset amortization, all net of the statutory tax expense
or benefit.
- Adjusted EPS attributable to IDEX is calculated as adjusted net
income attributable to IDEX 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. The
Company reconciles EBITDA to net income on a consolidated basis as
IDEX does not allocate consolidated interest expense or
consolidated provision for income taxes to its 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 less gains on sales of assets 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,
2022
Six Months Ended June 30,
2022
FMT
HST
FSDP
IDEX
FMT
HST
FSDP
IDEX
Change in net sales
19
%
19
%
7
%
16
%
16
%
22
%
5
%
16
%
- Net impact from
acquisitions/divestitures
9
%
10
%
—
%
7
%
6
%
11
%
—
%
6
%
- Impact from foreign currency
(3
%)
(3
%)
(4
%)
(3
%)
(2
%)
(3
%)
(3
%)
(2
%)
Change in organic net sales
13
%
12
%
11
%
12
%
12
%
14
%
8
%
12
%
Table 2: Reconciliations of Reported-to-Adjusted Gross Profit
and Margin (dollars in millions)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Gross profit
$
356.9
$
306.1
$
699.4
$
598.7
+ Fair value inventory step-up
charges
0.4
1.8
0.4
2.5
Adjusted gross profit
$
357.3
$
307.9
$
699.8
$
601.2
Net sales
$
796.1
$
686.0
$
1,547.2
$
1,338.0
Gross margin
44.8
%
44.6
%
45.2
%
44.7
%
Adjusted gross margin
44.9
%
44.9
%
45.2
%
44.9
%
Table 3: Reconciliations of Reported-to-Adjusted Operating
Income and Margin (dollars in millions)
Three Months Ended June
30,
2022
2021
FMT
HST
FSDP
Corporate
IDEX
FMT
HST
FSDP
Corporate
IDEX
Reported operating income
(loss)
$
82.9
$
86.5
$
39.9
$
(22.7
)
$
186.6
$
63.5
$
76.0
$
42.8
$
(24.0
)
$
158.3
+ Restructuring expenses and asset
impairments
1.7
0.1
1.0
—
2.8
1.9
0.5
0.1
0.7
3.2
+ Fair value inventory step-up
charges
0.4
—
—
—
0.4
1.8
—
—
—
1.8
+ Corporate transaction
indemnity
—
—
—
—
—
—
—
—
3.9
3.9
Adjusted operating income
(loss)
$
85.0
$
86.6
$
40.9
$
(22.7
)
$
189.8
$
67.2
$
76.5
$
42.9
$
(19.4
)
$
167.2
Net sales (eliminations)
$
299.9
$
326.0
$
171.2
$
(1.0
)
$
796.1
$
251.3
$
275.0
$
160.8
$
(1.1
)
$
686.0
Reported operating margin
27.7
%
26.5
%
23.3
%
n/m
23.4
%
25.3
%
27.6
%
26.6
%
n/m
23.1
%
Adjusted operating margin
28.4
%
26.5
%
23.9
%
n/m
23.8
%
26.7
%
27.8
%
26.7
%
n/m
24.4
%
Six Months Ended June
30,
2022
2021
FMT
HST
FSDP
Corporate
IDEX
FMT
HST
FSDP
Corporate
IDEX
Reported operating income
(loss)
$
163.3
$
170.1
$
80.4
$
(39.6
)
$
374.2
$
126.4
$
142.6
$
87.4
$
(42.6
)
$
313.8
+ Restructuring expenses and asset
impairments
1.7
0.1
1.0
—
2.8
2.8
1.1
0.2
1.3
5.4
+ Fair value inventory step-up
charges
0.4
—
—
—
0.4
2.5
—
—
—
2.5
+ Corporate transaction
indemnity
—
—
—
—
—
—
—
—
3.9
3.9
Adjusted operating income
(loss)
$
165.4
$
170.2
$
81.4
$
(39.6
)
$
377.4
$
131.7
$
143.7
$
87.6
$
(37.4
)
$
325.6
Net sales (eliminations)
$
571.9
$
641.2
$
335.9
$
(1.8
)
$
1,547.2
$
494.6
$
525.4
$
320.3
$
(2.3
)
$
1,338.0
Reported operating margin
28.6
%
26.5
%
23.9
%
n/m
24.2
%
25.5
%
27.1
%
27.3
%
n/m
23.5
%
Adjusted operating margin
28.9
%
26.5
%
24.2
%
n/m
24.4
%
26.6
%
27.3
%
27.3
%
n/m
24.3
%
Table 4: Reconciliations of Reported-to-Adjusted Net Income
and EPS (in millions, except per share amounts)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Reported net income attributable to
IDEX
$
138.2
$
102.2
$
278.2
$
214.9
+ Restructuring expenses and asset
impairments
2.8
3.2
2.8
5.4
+ Tax impact on restructuring expenses
and asset impairments
(0.7
)
(0.9
)
(0.7
)
(1.4
)
+ Fair value inventory step-up
charges
0.4
1.8
0.4
2.5
+ Tax impact on fair value inventory
step-up charges
(0.1
)
(0.5
)
(0.1
)
(0.7
)
- Gains on sales of assets
—
—
(2.7
)
—
+ Tax impact on gains on sales of
assets
—
—
0.6
—
+ Corporate transaction
indemnity
—
3.9
—
3.9
+ Tax impact on Corporate transaction
indemnity
—
(0.9
)
—
(0.9
)
+ Loss on early debt redemption
—
8.6
—
8.6
+ Tax impact on loss on early debt
redemption
—
(1.8
)
—
(1.8
)
+ Termination of the U.S. pension
plan
—
9.7
—
9.7
+ Tax impact on termination of the U.S.
pension plan
—
(2.1
)
—
(2.1
)
+ Acquisition-related intangible asset
amortization
16.9
13.5
32.2
24.5
+ Tax impact on acquisition-related
intangible asset amortization
(3.9
)
(3.1
)
(7.3
)
(5.6
)
Adjusted net income attributable to
IDEX
$
153.6
$
133.6
$
303.4
$
257.0
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Reported diluted EPS attributable to
IDEX
$
1.81
$
1.34
$
3.65
$
2.81
+ Restructuring expenses and asset
impairments
0.04
0.04
0.04
0.07
+ Tax impact on restructuring expenses
and asset impairments
(0.01
)
(0.01
)
(0.01
)
(0.02
)
+ Fair value inventory step-up
charges
—
0.02
—
0.03
+ Tax impact on fair value inventory
step-up charges
—
(0.01
)
—
(0.01
)
- Gains on sales of assets
—
—
(0.03
)
—
+ Tax impact on gains on sales of
assets
—
—
0.01
—
+ Corporate transaction
indemnity
—
0.05
—
0.05
+ Tax impact on Corporate transaction
indemnity
—
(0.01
)
—
(0.01
)
+ Loss on early debt redemption
—
0.11
—
0.11
+ Tax impact on loss on early debt
redemption
—
(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
)
+ Acquisition-related intangible asset
amortization
0.22
0.18
0.42
0.32
+ Tax impact on acquisition-related
intangible asset amortization
(0.04
)
(0.04
)
(0.10
)
(0.07
)
Adjusted diluted EPS attributable to
IDEX
$
2.02
$
1.75
$
3.98
$
3.36
Diluted weighted average shares
outstanding
76.1
76.4
76.2
76.4
Table 5: Reconciliations of EBITDA to Net Income (dollars in
millions)
Three Months Ended June
30,
2022
2021
FMT
HST
FSDP
Corporate
IDEX
FMT
HST
FSDP
Corporate
IDEX
Reported operating income
(loss)
$
82.9
$
86.5
$
39.9
$
(22.7
)
$
186.6
$
63.5
$
76.0
$
42.8
$
(24.0
)
$
158.3
+ Other income (expense), net
0.2
1.2
0.5
(1.9
)
—
(5.6
)
(0.3
)
(2.1
)
(9.2
)
(17.2
)
+ Depreciation and amortization
9.8
15.8
3.7
0.1
29.4
7.9
12.6
3.8
0.1
24.4
EBITDA
92.9
103.5
44.1
(24.5
)
216.0
65.8
88.3
44.5
(33.1
)
165.5
- Interest expense
9.5
11.2
- Provision for income taxes
39.0
27.7
- Depreciation and amortization
29.4
24.4
Reported net income
$
138.1
$
102.2
Net sales (eliminations)
$
299.9
$
326.0
$
171.2
$
(1.0
)
$
796.1
$
251.3
$
275.0
$
160.8
$
(1.1
)
$
686.0
Reported operating margin
27.7
%
26.5
%
23.3
%
n/m
23.4
%
25.3
%
27.6
%
26.6
%
n/m
23.1
%
EBITDA margin
31.0
%
31.8
%
25.8
%
n/m
27.1
%
26.2
%
32.1
%
27.7
%
n/m
24.1
%
EBITDA interest coverage
22.7
14.8
Six Months Ended June
30,
2022
2021
FMT
HST
FSDP
Corporate
IDEX
FMT
HST
FSDP
Corporate
IDEX
Reported operating income
(loss)
$
163.3
$
170.1
$
80.4
$
(39.6
)
$
374.2
$
126.4
$
142.6
$
87.4
$
(42.6
)
$
313.8
+ Other income (expense), net
1.8
1.4
2.1
(3.0
)
2.3
(5.6
)
0.1
(1.8
)
(9.1
)
(16.4
)
+ Depreciation and amortization
17.4
31.8
7.5
0.2
56.9
15.0
23.1
7.7
0.2
46.0
EBITDA
182.5
203.3
90.0
(42.4
)
433.4
135.8
165.8
93.3
(51.5
)
343.4
- Interest expense
19.0
21.9
- Provision for income taxes
79.5
60.6
- Depreciation and amortization
56.9
46.0
Reported net income
$
278.0
$
214.9
Net sales (eliminations)
$
571.9
$
641.2
$
335.9
$
(1.8
)
$
1,547.2
$
494.6
$
525.4
$
320.3
$
(2.3
)
$
1,338.0
Reported operating margin
28.6
%
26.5
%
23.9
%
n/m
24.2
%
25.5
%
27.1
%
27.3
%
n/m
23.5
%
EBITDA margin
31.9
%
31.7
%
26.8
%
n/m
28.0
%
27.5
%
31.5
%
29.1
%
n/m
25.7
%
EBITDA interest coverage
22.8
15.6
Table 6 : Reconciliations of EBITDA to Adjusted EBITDA
(dollars in millions)
Three Months Ended June
30,
2022
2021
FMT
HST
FSDP
Corporate
IDEX
FMT
HST
FSDP
Corporate
IDEX
EBITDA(1)
$
92.9
$
103.5
$
44.1
$
(24.5
)
$
216.0
$
65.8
$
88.3
$
44.5
$
(33.1
)
$
165.5
+ Restructuring expenses and asset
impairments
1.7
0.1
1.0
—
2.8
1.9
0.5
0.1
0.7
3.2
+ Fair value inventory step-up
charges
0.4
—
—
—
0.4
1.8
—
—
—
1.8
- Gains on sales of assets
—
—
—
—
—
—
—
—
—
—
+ Corporate transaction
indemnity
—
—
—
—
—
—
—
—
3.9
3.9
+ Loss on early debt redemption
—
—
—
—
—
—
—
—
8.6
8.6
+ Termination of the U.S. pension
plan
—
—
—
—
—
6.3
—
1.8
1.6
9.7
Adjusted EBITDA
$
95.0
$
103.6
$
45.1
$
(24.5
)
$
219.2
$
75.8
$
88.8
$
46.4
$
(18.3
)
$
192.7
Adjusted EBITDA margin
31.7
%
31.8
%
26.4
%
n/m
27.5
%
30.2
%
32.2
%
28.9
%
n/m
28.1
%
Adjusted EBITDA interest
coverage
23.0
17.2
Six Months Ended June
30,
2022
2021
FMT
HST
FSDP
Corporate
IDEX
FMT
HST
FSDP
Corporate
IDEX
EBITDA(1)
$
182.5
$
203.3
$
90.0
$
(42.4
)
$
433.4
$
135.8
$
165.8
$
93.3
$
(51.5
)
$
343.4
+ Restructuring expenses and asset
impairments
1.7
0.1
1.0
—
2.8
2.8
1.1
0.2
1.3
5.4
+ Fair value inventory step-up
charges
0.4
—
—
—
0.4
2.5
—
—
—
2.5
- Gains on sales of assets
(1.2
)
—
(1.5
)
—
(2.7
)
—
—
—
—
—
+ Corporate transaction
indemnity
—
—
—
—
—
—
—
—
3.9
3.9
+ Loss on early debt redemption
—
—
—
—
—
—
—
—
8.6
8.6
+ Termination of the U.S. pension
plan
—
—
—
—
—
6.3
—
1.8
1.6
9.7
Adjusted EBITDA
$
183.4
$
203.4
$
89.5
$
(42.4
)
$
433.9
$
147.4
$
166.9
$
95.3
$
(36.1
)
$
373.5
Adjusted EBITDA margin
32.1
%
31.7
%
26.6
%
n/m
28.0
%
29.8
%
31.7
%
29.8
%
n/m
27.9
%
Adjusted EBITDA interest
coverage
22.8
17.0
(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 millions)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Cash flows from operating
activities
$
112.3
$
136.3
$
192.0
$
245.6
- Capital expenditures
15.6
16.0
31.7
30.6
Free cash flow
$
96.7
$
120.3
$
160.3
$
215.0
Table 8: Reconciliation of Estimated 2022 EPS to Adjusted EPS
Attributable to IDEX
Guidance
Third Quarter 2022
Full Year 2022
Estimated EPS attributable to
IDEX
$1.80 - $1.85
$7.19 - $7.29
+ Acquisition-related intangible asset
amortization
0.22
0.88
+ Tax impact on acquisition-related
intangible asset amortization
(0.04)
(0.20)
- Gains on sales of assets
—
(0.03)
+ Tax impact on gains on sales of
assets
—
0.01
+ Restructuring expenses and asset
impairments
—
0.04
+ Tax impact on restructuring expenses
and asset impairments
—
(0.01)
+ Fair value inventory step-up
charges
—
—
+ Tax impact on fair value inventory
step-up charges
—
—
Estimated adjusted EPS attributable to
IDEX
$1.98 - $2.03
$7.88 - $7.98
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220726005858/en/
Investor Contact: Allison S. Lausas Vice President and
Chief Accounting Officer (847) 498-7070
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