Mixed 4Q for IDEX

Zacks

IDEX Corporation (IEX) delivered adjusted earnings of 69 cents per share in the fourth quarter of 2012, up 6% from the year-ago quarter and ahead of the Zacks Consensus Estimate of 67 cents per share.

Full year 2012 adjusted earnings stood at $2.68 per share versus $2.56 in 2011. The adjusted earnings for 2012 were ahead of the Zacks Consensus Estimate of $2.66 per share.

Revenues

Net revenue came in at $490.8 million versus $480.6 million in the year-ago quarter. The quarterly revenues missed the Zacks Consensus Estimate of $492 million. For full year 2012, net revenue stood at $1,954.2 million versus $1,838.4 million in the previous year. New orders in the reported quarter totaled $482 million, up 8% from the year-ago period.

The Fluid and Metering Technologies (:FMT) segment reported sales of $212 million, down 2.0% year over year. The Health and Science Technologies (HST) segment revenues came in at $175.0 million, up nearly 6% annually. The Fire and Safety segment recorded sales of $109.0 million, up 9.0% year over year.

Margins

Adjusted operating margin (excluding re-structuring charges) in the quarter was 18.5%, up 70 basis points year over year.

The FMT segment reported operating margin of 21.0%, up 120 basis points year over year. The segment’s margin was highly influenced by the company’s high productivity and cost-cutting strategy.

The HST segment’s operating margin came in at 18.4%, down 100 basis points from the year-ago quarter. The decline was primarily attributed to the adverse effects of acquisition activities.

The Fire and Safety products segment recorded an operating margin of 24.2%, up 200 basis points from the year-ago quarter. The annual rise was primarily led by the company’s augmented productivity and higher volume.

Balance Sheet and Cash Flow

As of Dec 31, 2012, the company had cash and cash equivalents of $318.9 million, compared to $230.3 million in the year-ago period. Long-term debt came down to $779.2 million from $806.4 million in the previous year.

Cash flow from operating activities amounted to $85.7 million in the fourth quarter of 2012 compared to $41.6 million in the year-ago quarter. IDEX Corporation  repurchased  2.2 million shares for $90 million in 2012.

Outlook

For the first quarter of 2013, earnings are expected in the range of 70 to 72 cents per share, up 6% to 9%. For full year 2013, the company expects earnings in the range of $2.85 to $2.95, up 6% to 10% from 2012.

With over $1 billion of available capital, IDEX Corporation continues to fund organic growth while pursuing strategic acquisitions, maintaining steady dividends and remaining active on share repurchases. Going forward, the company expects low- to mid-single digit organic growth in 2013 with a healthy performance in the second half of the year.

However, the company operates in an intensely competitive landscape that includes big players such as Gorman- Rupp Co (GRC) and Standex International Corp (SXI), which might limit its profitability.

IDEX Corporation currently has a Zacks Rank #2 (Buy). One of its competitors, Graco Inc (GGG) also carries a Zacks Rank #2 (Buy).
 

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