Industrial goods manufacturer IDEX Corporation (IEX) reported fourth quarter 2013 net income of $67.6 million versus loss of $119.0 million in the year-ago quarter. Earnings per share in the reported quarter stood at 82 cents versus a loss of $1.45 in the year-ago quarter. The reported earnings were well ahead of the Zacks Consensus Estimate of 80 cents. The increase in earnings was driven by increase in sales and orders.
For 2013, net income stood at $255.2 million versus $37.6 million in the prior year. Earnings per share stood at $3.09 versus 45 cents in 2012. The reported earnings were ahead of the Zacks Consensus Estimate of $2.98.
Net sales in the reported quarter improved to $520.6 million compared with $490.8 million. However, the quarterly revenues were in line with the Zacks Consensus Estimate. Orders stood at $519 million, up 8% from the year-ago period. Organic growth contributed 5% and 7% to quarterly sales and orders, respectively.
For 2013, net sales improved to $2,024.1 million from $1,954.3 million in 2012. However, revenues for full year 2013 missed the Zacks Consensus Estimate of $2,051 million. Orders stood at $2.1 billion, up 7% from the year-ago period.
By segments, Fluid and Metering Technologies (:FMT) reported sales of $222 million in the quarter, up 5% year over year. The Health and Science Technologies (HST) segment revenues came in at $182 million in the reported quarter, improving 4% year over year, while the Fire and Safety/Diversified Products segment recorded sales of $118 million, up 9% year over year.
Operating margin in the reported quarter improved 150 basis points to 20.0%, driven by an increase in productivity and volume leverage. Adjusted Earnings before Interest, Taxes Depreciation and Amortization (:EBITDA) stood at $122.8 million in the reported quarter, up 10% from the year-ago period.
The FMT segment reported operating margin of 24.9% in the reported quarter, up 390 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 18.2%, down 20 basis points from the year-ago quarter due to charges associated with cost-out actions taken during the quarter, partially offset by higher volume and productivity initiatives.
The Fire and Safety segment recorded an operating margin of 24.3%, up 10 basis points from the year-ago quarter. The year-over-year increase was primarily attributable to volumes and productivity initiatives.
Balance Sheet and Cash Flow
As of Dec 31, 2013, IDEX Corporation had cash and cash equivalents of $439.6 million, while long-term debt stood at $772.0 million.
Cash flow from operating activities aggregated $401.5 million for full year 2013 compared with $326.1 million in 2012. Free cash flow stood at $378.6 million as of Dec 31, 2013 versus $294.8 million in the year-ago period – a remarkable 28% year-over-year improvement.
IDEX Corporation repurchased 2.9 million shares for $166 million in 2013.
IDEX Corporation remains bullish about its top- and bottom-line growth. For first quarter 2014, earnings are expected in the range of 83 to 85 cents per share, up 12.0% -15.0% from the prior year. For full year 2014, the company expects earnings in the range of $3.33 to $3.43, up 8.0%-11.0% from the prior year. Organic revenue growth is expected in the range of 3%–5%.
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 #3 (Hold). Other stocks that look promising in the industry and are worth considering include Altra Industrial Motion Corp. (AIMC), Applied Industrial Technologies, Inc. (AIT) and Barnes Group Inc. (B), each carrying a Zacks Rank #2 (Buy).