IDEX Beats Q3 Earnings Estimates

Zacks

Industrial goods manufacturer IDEX Corporation (IEX) reported third quarter 2013 earnings of 78 cents per share, up 18% from the year-ago quarter and ahead of the Zacks Consensus Estimate of 74 cents. Net income stood at $64.0 million, up 16.0% year over year.

Revenues

Net sales in the reported quarter improved to $490.6 million from $479.9 million in the year-earlier quarter. However, the quarterly revenues missed the Zacks Consensus Estimate of $508 million. Orders stood at $532 million, up 14% from the year-ago period. Organic growth contributed 1% and 13% to quarterly sales and orders, respectively.

By segments, Fluid and Metering Technologies (:FMT) reported sales of $212 million, up 7% year over year. The Health and Science Technologies (HST) segment revenues came in at $179 million, improving 1% year over year, while the Fire and Safety/Diversified Products segment recorded sales of $101 million, down 6% year over year.

Margins

Operating margin in the quarter improved 150 basis points to 19.8%, driven by increase in productivity and cost-cutting initiatives. Earnings before Interest, Taxes Depreciation and Amortization (:EBITDA) stood at $117 million, up 17% from the year-ago period.

The FMT segment reported operating margin of 24.4%, up 300 basis points year over year. The segment’s margin benefited from higher volume and productivity initiatives.

The HST segment’s operating margin came in at 20.6%, up 330 basis points from the year-ago quarter due to productivity and cost reductions.

The Fire and Safety segment recorded an operating margin of 21.9%, down 290 basis points from the year-ago quarter. The year-over-year decline was primarily attributable to unfavourable product mix and lower volumes.

Balance Sheet and Cash Flow

As of Sep 30, 2013, IDEX Corporation had cash and cash equivalents of $399.8 million, while long-term debt stood at $780.0 million.

Cash flow from operating activities aggregated $118.4 million in the reported quarter compared with $101.0 million in the year-ago quarter, representing a 17% year-over-year increase. Free cash flow stood at $113.2 million in the reported quarter versus $92.4 million in the year-ago period – a remarkable 23% year-over-year improvement.

IDEX Corporation repurchased 881,000 shares for $53 million in the reported quarter, bringing its year-to-date tally to 2.5 million shares for $138 million.

Outlook

Despite a volatile macroeconomic environment, IDEX Corporation remains bullish about both its top- and bottom-line growth. For the fourth quarter of 2013, earnings are expected in the range of 78 to 80 cents per share. For full year 2013, the company expects earnings in the range of $3.05 to $3.07.

IDEX Corporation continues to fund organic growth while pursuing strategic acquisitions, increasing dividends and remaining active on share repurchases. We remain encouraged with the positive outlook of the company.

IDEX Corporation currently has a Zacks Rank #4 (Sell). Other stocks that look promising in the industry and are worth considering include Colfax Corporation. (CFX), Parker-Hannifin Corporation (PH) and Ingersoll-Rand Plc. (IR), each carrying a Zacks Rank #2 (Buy).
 

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