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IDEX Reports Fourth Quarter and Full Year 2020 Results

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IDEX Corporation (NYSE: IEX) today announced its financial results for the quarter and year ended December 31, 2020.

2020 Highlights

  • Full year EPS of $4.94; adjusted EPS of $5.19

  • Full year cash from operations of $569 million, up 8 percent, resulting in record full year free cash flow of $518 million, up 9 percent

  • Record fourth quarter orders of $679 million were up 10 percent overall and 7 percent organically

  • Fourth quarter EPS of $1.32; adjusted EPS of $1.37

  • Announced the acquisition of Abel Pumps, L.P. and certain of its affiliates in January 2021

Full Year 2020

Orders of $2.4 billion were down 3 percent compared with the prior year (-4 percent organic and +1 percent acquisition).

Sales of $2.4 billion were down 6 percent compared with the prior year (-9 percent organic and +3 percent acquisition).

Gross margin of 43.7 percent was down 140 basis points compared with the prior year as a result of lower volume and business mix, partially offset by price capture. Excluding a $4.1 million pre-tax fair value inventory step-up charge related to the Flow MD acquisition, adjusted gross margin of 43.9 percent was down 130 basis points compared with the adjusted prior year.

Operating income of $520.7 million resulted in an operating margin of 22.1 percent, down 110 basis points from the prior year primarily due to lower volume and business mix, partially offset by price capture and cost savings in the current year as well as higher asset impairments in the prior year. Excluding the $4.1 million pre-tax fair value inventory step-up charge and $11.8 million of restructuring expenses and asset impairments, adjusted operating income was $536.6 million with an adjusted operating margin of 22.8 percent, down 140 basis points from the adjusted prior year. Adjusted operating income drove adjusted EBITDA of $622.9 million which was 27 percent of sales and covered interest expense by almost 14 times.

Provision for income taxes of $92.6 million resulted in an effective tax rate (ETR) of 19.7 percent, which was lower than the prior year ETR of 20.2 percent primarily due to benefits associated with the finalization of the Global Intangible Low-Tax Income ("GILTI") regulations in the third quarter of 2020.

Net income was $377.8 million which resulted in EPS of $4.94, down 62 cents, or 11 percent, from the prior year EPS. Excluding the $3.2 million fair value inventory step-up charge, the $6.5 million loss on early debt redemption, and $9.1 million of restructuring expenses and asset impairments, all net of related tax benefits, adjusted EPS of $5.19 decreased 61 cents, or 11 percent, from the prior year adjusted EPS.

Cash from operations of $569.3 million was up 8 percent from the prior year and was 151 percent of net income primarily due to working capital improvements, partially offset by lower earnings. Cash from operations led to free cash flow of $517.7 million, which was up 9 percent from the prior year and was 131 percent of adjusted net income.

The Company repurchased 876 thousand shares of common stock for $110.3 million in 2020.

Fourth Quarter 2020

Orders of $678.6 million were up 10 percent compared with the prior year period (+7 percent organic, +1 percent acquisition and +2 percent foreign currency translation).

Sales of $614.8 million were up 2 percent compared with the prior year period (-1 percent organic, +1 percent acquisition and +2 percent foreign currency translation).

Gross margin of 43.8 percent was down 20 basis points compared with the prior year period primarily due to lower volume and business mix, partially offset by price capture.

Operating income of $139.0 million resulted in an operating margin of 22.6 percent, up 50 basis points compared to the prior year period due to price capture and cost savings, partially offset by lower volume and business mix. Excluding $5.0 million of restructuring expenses and asset impairments, adjusted operating income was $144.0 million with an adjusted operating margin of 23.4 percent, up 10 basis points compared to the adjusted prior year period. Adjusted operating income drove adjusted EBITDA of $167.2 million which was 27 percent of sales and covered interest expense by over 15 times.

Provision for income taxes of $28.8 million resulted in an ETR of 22.2 percent, which was higher than the prior year period ETR of 20.6 percent primarily due to the revaluation of foreign deferred income tax balances necessitated by changes in foreign tax rates.

Net income was $101.1 million which resulted in EPS of $1.32, up 6 cents, or 5 percent, from the prior year period EPS. Excluding restructuring expenses and asset impairments, adjusted EPS of $1.37 increased 4 cents, or 3 percent, from the prior year period adjusted EPS.

Cash from operations of $161.4 million was up 7 percent from the prior year period and was 160 percent of net income. Cash from operations led to free cash flow of $149.3 million, which was up 9 percent compared to the prior year period and was 142 percent of adjusted net income.

"I want to thank the entire IDEX team for their perseverance and performance throughout the pandemic in 2020. With our focus on workplace safety, business continuity, liquidity and playing offense opportunistically, we were able to deliver for our shareholders, customers and employees in 2020. I am honored to be the leader of this outstanding global organization.

Full year organic orders and sales were down 4 and 9 percent, respectively. Adjusted EPS of $5.19 was only down 11 percent from the adjusted prior year due to our proactive restructuring actions and tight control of discretionary costs. Record free cash flow of $518 million in 2020, which was 9% higher than prior year, is a testament to the financial durability of our business.

Our business continued to advance in the fourth quarter, with most end markets improving and all three segments experiencing positive organic order growth. Fourth quarter organic orders increased 7 percent, while organic sales were only down 1 percent. Record fourth quarter orders of $679 million increased year-end backlog by $64 million. Adjusted EPS of $1.37 was 3 percent higher compared to the adjusted prior year period while free cash flow of $149 million was 9 percent higher than the prior year period.

Last month we announced a definitive agreement to acquire Abel Pumps L.P., which will be an excellent complement to our existing pump platform within the Fluid & Metering Technologies (FMT) segment. The M&A opportunity funnel continues to improve and we are fully committed to putting our strong balance sheet to work through focused resource deployment and process optimization. We continue to invest in our best targeted organic growth opportunities. We increased capital investment in 2020, maintaining our commitment to the company’s long-term health, while managing implications of the pandemic.

Based on our strong orders in the fourth quarter and sustained sequential improvement, we expect our end markets will continue to improve in 2021. We are projecting 6 to 8 percent organic sales growth for the full year 2021, with a 2 to 4 percent organic sales increase in the first quarter. Full year 2021 EPS is projected to be $5.65 to $5.95, with first quarter EPS of $1.38 to $1.42."

Eric D. Ashleman
Chief Executive Officer and President

Fourth Quarter 2020 Segment Highlights

Fluid & Metering Technologies

  • Sales of $229.6 million reflected a 1 percent increase compared to the fourth quarter of 2019 (-4 percent organic, +3 percent acquisition and +2 percent foreign currency translation).

  • Operating income of $58.9 million resulted in an operating margin of 25.7 percent, a 150 basis point decrease compared to the prior year period primarily due to lower volume, business mix, higher restructuring expenses and asset impairments and the dilutive impact on margins from the Flow MD acquisition, partially offset by price capture and cost savings. Excluding $3.1 million of restructuring expenses and asset impairments, adjusted operating income was $62.0 million with an adjusted operating margin of 27.0 percent, a 100 basis point decrease compared to the adjusted prior year period.

  • EBITDA of $66.3 million resulted in an EBITDA margin of 28.9 percent. Excluding $3.1 million of restructuring expenses and asset impairments, adjusted EBITDA of $69.4 million resulted in an adjusted EBITDA margin of 30.2 percent, a 30 basis point decrease compared to the adjusted prior year period.

Health & Science Technologies

  • Sales of $235.9 million reflected a 4 percent increase compared to the fourth quarter of 2019 (+2 percent organic and +2 percent foreign currency translation).

  • Operating income of $55.8 million resulted in an operating margin of 23.7 percent, a 210 basis point increase compared to the prior year period primarily due to price capture, higher volume and cost savings in the current year period as well as the asset impairments in the prior year period. Excluding $0.6 million of restructuring expenses and asset impairments, adjusted operating income was $56.4 million with an adjusted operating margin of 23.9 percent, a 110 basis point increase compared to the adjusted prior year period.

  • EBITDA of $66.7 million resulted in an EBITDA margin of 28.3 percent. Excluding $0.6 million of restructuring expenses and asset impairments, adjusted EBITDA of $67.3 million resulted in an adjusted EBITDA margin of 28.5 percent, a 150 basis point increase compared to the adjusted prior year period.

Fire & Safety/Diversified Products

  • Sales of $150.6 million reflected a 1 percent decrease compared to the fourth quarter of 2019 (-3 percent organic and +2 percent foreign currency translation).

  • Operating income of $40.2 million resulted in an operating margin of 26.7 percent, an 80 basis point increase compared to the prior year period primarily due to price capture and cost savings, partially offset by lower volume. Excluding $0.6 million of restructuring expenses and asset impairments, adjusted operating income was $40.8 million with an adjusted operating margin of 27.1 percent, a 90 basis point increase compared to the adjusted prior year period.

  • EBITDA of $43.8 million resulted in an EBITDA margin of 29.1 percent. Excluding $0.6 million of restructuring expenses and asset impairments, adjusted EBITDA of $44.4 million resulted in an adjusted EBITDA margin of 29.5 percent, a 130 basis point increase compared to the adjusted prior year period.

For the fourth quarter of 2020, Fluid & Metering Technologies contributed 37 percent of sales, 38 percent of operating income and 37 percent of EBITDA; Health & Science Technologies accounted for 38 percent of sales, 36 percent of operating income and 38 percent of EBITDA; and Fire & Safety/Diversified Products represented 25 percent of sales, 26 percent of operating income and 25 percent of EBITDA.

Corporate Costs

Corporate costs decreased to $63.9 million in 2020 compared to $69.2 million in 2019 as a result of lower discretionary spending and lower stock compensation costs due to the departure of our former Chief Executive Officer, partially offset by increased funding of the IDEX Foundation and higher acquisition costs.

Corporate costs increased to $15.3 million in the fourth quarter of 2020 from $14.2 million in the fourth quarter of 2019 primarily as a result of higher variable compensation costs, higher acquisition costs and increased funding of the IDEX Foundation, partially offset by lower stock compensation costs due to the departure of our former Chief Executive Officer.

Acquisition

On January 8, 2021, the Company entered into a definitive agreement to acquire Abel Pumps, L.P. and certain of its affiliates (ABEL) for cash consideration of $103.5 million. ABEL is based in Büchen, Germany, with sales and service locations in Madrid, Spain and Pittsburgh, Pennsylvania. ABEL designs and manufactures highly engineered reciprocating positive displacement pumps for a variety of end markets, including mining, marine, power, water, wastewater and other general industries. With annual sales of approximately $34 million, ABEL will be part of our Pumps platform within the Fluid and Metering Technologies segment. The Company expects to close the transaction by the end of the first quarter 2021 subject to regulatory approval and customary closing conditions.

Restructuring Expenses and Asset Impairments

The Company recorded $5.0 million and $11.8 million of restructuring expenses and asset impairments in the fourth quarter and full year 2020, respectively, to facilitate long-term, sustainable growth through cost reduction actions, primarily consisting of employee reductions, facility rationalization and impairment charges. The fourth quarter and full year 2020 included $3.1 million of impairment charges primarily related to the consolidation of certain facilities in the Fluid & Metering Technologies segment.

COVID-19 Impact

The Company has adapted to help in the fight against COVID-19 with several of our businesses pivoting to support many products that are being used in the fight against COVID-19. Safety is our top priority and we have implemented protocols at all of our facilities, including temperature taking, social distancing, enhanced cleaning and face coverings. These measures have enabled successful business continuity, allowing our facilities to remain in operation with only temporary shutdowns at the initial onset of the COVID-19 pandemic. Although we have remained in operation throughout the pandemic, satisfying customer needs in part through our focus on the development and manufacturing of products used in the fight against COVID-19, the pandemic and the enacted containment measures have adversely affected our business and results of operations. From the onset of the pandemic through the second quarter of 2020, our customers purchased less product than they have historically purchased; however, beginning in the third quarter and continuing through the fourth quarter of 2020 we began to see improvement in our end markets and we expect our end markets to continue to normalize to historical levels through 2021. Additionally, IDEX has implemented cost reduction actions, including employee reductions and facility consolidations, and continues to maintain a tight cost control environment. Moreover, COVID-19 and related measures to contain its impact have caused material disruptions in both national and global financial markets and economies. The continuing impact of COVID-19 and the enacted containment measures cannot be predicted and may continue to adversely affect, perhaps materially, our business, results of operations, financial condition and liquidity.

Non-U.S. GAAP Measures of Financial Performance

The Company supplements certain U.S. GAAP financial performance metrics with non-U.S. GAAP financial performance metrics. Management believes these non-U.S. 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 restructuring expenses and asset impairments, fair value inventory step-up charges and the loss on early debt redemption. Reconciliations of non-U.S. GAAP financial performance metrics to their most comparable U.S. 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 U.S. GAAP. There were no adjustments to U.S. 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.

  • 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 the loss on early debt redemption, 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.

  • Adjusted EBITDA is calculated as EBITDA plus fair value inventory step-up charges plus restructuring expenses and asset impairments plus the loss on early debt redemption.

  • Adjusted EBITDA margin is calculated as adjusted EBITDA divided by net sales.

  • 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

For the Quarter Ended December 31, 2020

For the Year Ended December 31, 2020

FMT

HST

FSDP

IDEX

FMT

HST

FSDP

IDEX

Change in net sales

1

%

4

%

(1

%)

2

%

(6

%)

(2

%)

(10

%)

(6

%)

- Net impact from acquisitions

3

%

%

%

1

%

6

%

2

%

%

3

%

- Impact from FX

2

%

2

%

2

%

2

%

%

%

1

%

%

Change in organic net sales

(4

%)

2

%

(3

%)

(1

%)

(12

%)

(4

%)

(11

%)

(9

%)

Table 2: Reconciliations of Reported-to-Adjusted Gross Profit and Margin (dollars in thousands)

For the Quarter Ended December 31,

For the Year Ended December 31,

2020

2019

2020

2019

Gross profit

$

269,168

$

266,885

$

1,027,424

$

1,125,034

+ Fair value inventory step-up charge

4,107

3,340

Adjusted gross profit

$

269,168

$

266,885

$

1,031,531

$

1,128,374

Net sales

$

614,822

$

605,997

$

2,351,646

$

2,494,573

Gross margin

43.8

%

44.0

%

43.7

%

45.1

%

Adjusted gross margin

43.8

%

44.0

%

43.9

%

45.2

%

Table 3: Reconciliations of Reported-to-Adjusted Operating Income and Margin (dollars in thousands)

For the Quarter Ended December 31,

2020

2019

FMT

HST

FSDP

Corporate

IDEX

FMT

HST

FSDP

Corporate

IDEX

Reported operating income (loss)

$

58,900

$

55,794

$

40,214

$

(15,943

)

$

138,965

$

61,763

$

49,113

$

39,349

$

(16,052

)

$

134,173

+ Restructuring expenses and asset impairments

3,147

580

634

657

5,018

1,949

2,723

441

1,849

6,962

Adjusted operating income (loss)

$

62,047

$

56,374

$

40,848

$

(15,286

)

$

143,983

$

63,712

$

51,836

$

39,790

$

(14,203

)

$

141,135

Net sales (eliminations)

$

229,584

$

235,857

$

150,555

$

(1,174

)

$

614,822

$

227,456

$

227,293

$

152,025

$

(777

)

$

605,997

Reported operating margin

25.7

%

23.7

%

26.7

%

n/m

22.6

%

27.2

%

21.6

%

25.9

%

n/m

22.1

%

Adjusted operating margin

27.0

%

23.9

%

27.1

%

n/m

23.4

%

28.0

%

22.8

%

26.2

%

n/m

23.3

%

For the Year Ended December 31,

2020

2019

FMT

HST

FSDP

Corporate

IDEX

FMT

HST

FSDP

Corporate

IDEX

Reported operating income (loss)

$

235,011

$

206,356

$

144,191

$

(64,845

)

$

520,713

$

285,256

$

200,200

$

165,258

$

(71,711

)

$

579,003

+ Restructuring expenses and asset impairments

5,580

2,742

2,524

930

11,776

2,879

14,249

1,364

2,552

21,044

+ Fair value inventory step-up charge

4,107

4,107

3,340

3,340

Adjusted operating income (loss)

$

244,698

$

209,098

$

146,715

$

(63,915

)

$

536,596

$

288,135

$

217,789

$

166,622

$

(69,159

)

$

603,387

Net sales (eliminations)

$

896,304

$

895,962

$

562,851

$

(3,471

)

$

2,351,646

$

957,028

$

914,446

$

626,770

$

(3,671

)

$

2,494,573

Reported operating margin

26.2

%

23.0

%

25.6

%

n/m

22.1

%

29.8

%

21.9

%

26.4

%

n/m

23.2

%

Adjusted operating margin

27.3

%

23.3

%

26.1

%

n/m

22.8

%

30.1

%

23.8

%

26.6

%

n/m

24.2

%

Table 4: Reconciliations of Reported-to-Adjusted Net Income and EPS (in thousands, except EPS)

For the Quarter Ended
December 31,

For the Year Ended
December 31,

2020

2019

2020

2019

Reported net income

$

101,068

$

96,850

$

377,778

$

425,521

+ Restructuring expenses and asset impairments

5,018

6,962

11,776

21,044

+ Tax impact on restructuring expenses and asset impairments

(1,182

)

(1,630

)

(2,722

)

(4,966

)

+ Fair value inventory step-up charge

4,107

3,340

+ Tax impact on fair value inventory step-up charge

(932

)

(735

)

+ Loss on early debt redemption

8,421

+ Tax impact on loss on early debt redemption

(1,912

)

Adjusted net income

$

104,904

$

102,182

$

396,516

$

444,204

For the Quarter Ended
December 31,

For the Year Ended
December 31,

2020

2019

2020

2019

Reported EPS

$

1.32

$

1.26

$

4.94

$

5.56

+ Restructuring expenses and asset impairments

0.06

0.09

0.15

0.28

+ Tax impact on restructuring expenses and asset impairments

(0.01

)

(0.02

)

(0.03

)

(0.07

)

+ Fair value inventory step-up charge

0.05

0.04

+ Tax impact on fair value inventory step-up charge

(0.01

)

(0.01

)

+ Loss on early debt redemption

0.11

+ Tax impact on loss on early debt redemption

(0.02

)

Adjusted EPS

$

1.37

$

1.33

$

5.19

$

5.80

Diluted weighted average common shares outstanding

76,367

76,570

76,400

76,454

Table 5: Reconciliations of EBITDA to Net Income (dollars in thousands)

For the Quarter Ended December 31,

2020

2019

FMT

HST

FSDP

Corporate

IDEX

FMT

HST

FSDP

Corporate

IDEX

Reported operating income (loss)

$

58,900

$

55,794

$

40,214

$

(15,943

)

$

138,965

$

61,763

$

49,113

$

39,349

$

(16,052

)

$

134,173

- Other (income) expense - net

(819

)

64

251

(1,190

)

(1,694

)

(137

)

805

498

(108

)

1,058

+ Depreciation and amortization

6,569

10,972

3,807

173

21,521

5,499

10,283

3,588

160

19,530

EBITDA

66,288

66,702

43,770

(14,580

)

162,180

67,399

58,591

42,439

(15,784

)

152,645

- Interest expense

10,788

11,079

- Provision for income taxes

28,803

25,186

- Depreciation and amortization

21,521

19,530

Reported net income

$

101,068

$

96,850

Net sales (eliminations)

$

229,584

$

235,857

$

150,555

$

(1,174

)

$

614,822

$

227,456

$

227,293

$

152,025

$

(777

)

$

605,997

Reported operating margin

25.7

%

23.7

%

26.7

%

n/m

22.6

%

27.2

%

21.6

%

25.9

%

n/m

22.1

%

EBITDA margin

28.9

%

28.3

%

29.1

%

n/m

26.4

%

29.6

%

25.8

%

27.9

%

n/m

25.2

%

For the Year Ended December 31,

2020

2019

FMT

HST

FSDP

Corporate

IDEX

FMT

HST

FSDP

Corporate

IDEX

Reported operating income (loss)

$

235,011

$

206,356

$

144,191

$

(64,845

)

$

520,713

$

285,256

$

200,200

$

165,258

$

(71,711

)

$

579,003

- Other (income) expense - net

(854

)

(27

)

399

6,109

5,627

475

2,441

771

(1,928

)

1,759

+ Depreciation and amortization

25,939

41,778

15,216

562

83,495

22,152

39,721

14,333

670

76,876

EBITDA

261,804

248,161

159,008

(70,392

)

598,581

306,933

237,480

178,820

(69,113

)

654,120

- Interest expense

44,746

44,341

- Provision for income taxes

92,562

107,382

- Depreciation and amortization

83,495

76,876

Reported net income

$

377,778

$

425,521

Net sales (eliminations)

$

896,304

$

895,962

$

562,851

$

(3,471

)

$

2,351,646

$

957,028

$

914,446

$

626,770

$

(3,671

)

$

2,494,573

Reported operating margin

26.2

%

23.0

%

25.6

%

n/m

22.1

%

29.8

%

21.9

%

26.4

%

n/m

23.2

%

EBITDA margin

29.2

%

27.7

%

28.3

%

n/m

25.5

%

32.1

%

26.0

%

28.5

%

n/m

26.2

%

Table 6: Reconciliations of EBITDA to Adjusted EBITDA (dollars in thousands)

For the Quarter Ended December 31,

2020

2019

FMT

HST

FSDP

Corporate

IDEX

FMT

HST

FSDP

Corporate

IDEX

EBITDA(1)

$

66,288

$

66,702

$

43,770

$

(14,580

)

$

162,180

$

67,399

$

58,591

$

42,439

$

(15,784

)

$

152,645

+ Restructuring expenses and asset impairments

3,147

580

634

657

5,018

1,949

2,723

441

1,849

6,962

Adjusted EBITDA

$

69,435

$

67,282

$

44,404

$

(13,923

)

$

167,198

$

69,348

$

61,314

$

42,880

$

(13,935

)

$

159,607

Adjusted EBITDA margin

30.2

%

28.5

%

29.5

%

n/m

27.2

%

30.5

%

27.0

%

28.2

%

n/m

26.3

%

For the Year Ended December 31,

2020

2019

FMT

HST

FSDP

Corporate

IDEX

FMT

HST

FSDP

Corporate

IDEX

EBITDA(1)

$

261,804

$

248,161

$

159,008

$

(70,392

)

$

598,581

$

306,933

$

237,480

$

178,820

$

(69,113

)

$

654,120

+ Restructuring expenses and asset impairments

5,580

2,742

2,524

930

11,776

2,879

14,249

1,364

2,552

21,044

+ Fair value inventory step-up charge

4,107

4,107

3,340

3,340

+ Loss on early debt redemption

8,421

8,421

Adjusted EBITDA

$

271,491

$

250,903

$

161,532

$

(61,041

)

$

622,885

$

309,812

$

255,069

$

180,184

$

(66,561

)

$

678,504

Adjusted EBITDA margin

30.3

%

28.0

%

28.7

%

n/m

26.5

%

32.4

%

27.9

%

28.7

%

n/m

27.2

%

(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)

For the Quarter Ended

For the Year Ended
December 31,

December 31,

September 30,

2020

2019

2020

2020

2019

Cash flow from operating activities

$

161,374

$

151,160

$

153,686

$

569,273

$

528,062

- Capital expenditures

12,107

14,139

18,353

51,545

50,912

Free cash flow

$

149,267

$

137,021

$

135,333

$

517,728

$

477,150

Conference Call to be Broadcast over the Internet

IDEX will broadcast its fourth quarter earnings conference call over the Internet on Thursday, February 4, 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 #13712088.

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, the expected timing and anticipated benefits of the Company’s acquisition of Abel Pumps, L.P. and certain of its affiliates, and the anticipated continuing effects of the coronavirus pandemic, including with respect to the Company's sales, improvements in the Company’s end markets, facility closures, supply chains and access to capital, capital expenditures, acquisitions, cost reductions, cash flow, revenues, earnings, market conditions, global economies 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 continuing effects of the coronavirus pandemic 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 40 diverse businesses around the world part of the IDEX family. With 7,000 employees and manufacturing operations in more than 20 countries, IDEX is a high-performing, global $2+ 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 for per share amounts)

(unaudited)

For the Quarter Ended
December 31,

For the Year Ended
December 31,

2020

2019

2020

2019

Net sales

$

614,822

$

605,997

$

2,351,646

$

2,494,573

Cost of sales

345,654

339,112

1,324,222

1,369,539

Gross profit

269,168

266,885

1,027,424

1,125,034

Selling, general and administrative expenses

125,185

125,750

494,935

524,987

Restructuring expenses and asset impairments

5,018

6,962

11,776

21,044

Operating income

138,965

134,173

520,713

579,003

Other (income) expense - net

(1,694

)

1,058

5,627

1,759

Interest expense

10,788

11,079

44,746

44,341

Income before income taxes

129,871

122,036

470,340

532,903

Provision for income taxes

28,803

25,186

92,562

107,382

Net income

$

101,068

$

96,850

$

377,778

$

425,521

Earnings per Common Share:

Basic earnings per common share

$

1.33

$

1.28

$

4.98

$

5.62

Diluted earnings per common share

$

1.32

$

1.26

$

4.94

$

5.56

Share Data:

Basic weighted average common shares outstanding

75,817

75,779

75,741

75,594

Diluted weighted average common shares outstanding

76,367

76,570

76,400

76,454

IDEX CORPORATION

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

December 31,
2020

December 31,
2019

Assets

Current assets

Cash and cash equivalents

$

1,025,851

$

632,581

Receivables - net

293,146

298,186

Inventories

289,910

293,467

Other current assets

48,324

37,211

Total current assets

1,657,231

1,261,445

Property, plant and equipment - net

298,273

280,316

Goodwill and intangible assets

2,311,137

2,167,776

Other noncurrent assets

147,757

104,375

Total assets

$

4,414,398

$

3,813,912

Liabilities and equity

Current liabilities

Trade accounts payable

$

151,993

$

138,463

Accrued expenses

208,828

180,290

Short-term borrowings

88

388

Dividends payable

38,149

38,736

Total current liabilities

399,058

357,877

Long-term borrowings

1,044,354

848,864

Other noncurrent liabilities

430,660

343,942

Total liabilities

1,874,072

1,550,683

Shareholders' equity

2,540,203

2,263,229

Noncontrolling interest

123

Total equity

2,540,326

2,263,229

Total liabilities and equity

$

4,414,398

$

3,813,912

IDEX CORPORATION

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

For the Year Ended
December 31,

2020

2019

Cash flows from operating activities

Net income

$

377,778

$

425,521

Adjustments to reconcile net income to net cash provided by operating activities:

(Gain) loss on sale of fixed assets - net

(868

)

156

Asset impairments

3,087

10,155

Depreciation and amortization

41,651

39,543

Amortization of intangible assets

41,844

37,333

Amortization of debt issuance expenses

1,716

1,355

Share-based compensation expense

19,375

27,669

Deferred income taxes

11,038

6,625

Non-cash interest expense associated with forward starting swaps

6,021

6,327

Changes in (net of the effect from acquisitions):

Receivables

20,873

22,338

Inventories

36,523

(3,322

)

Other current assets

(10,276

)

(2,361

)

Trade accounts payable

2,702

(9,115

)

Deferred revenue

38,967

8,680

Accrued expenses

(15,326

)

(46,664

)

Other - net

(5,832

)

3,822

Net cash flows provided by operating activities

569,273

528,062

Cash flows from investing activities

Purchases of property, plant and equipment

(51,545

)

(50,912

)

Acquisition of businesses, net of cash acquired

(123,133

)

(87,180

)

Contributions received from joint venture partner

120

Proceeds from disposal of fixed assets

2,287

962

Other - net

(306

)

115

Net cash flows used in investing activities

(172,577

)

(137,015

)

Cash flows from financing activities

Borrowings under revolving credit facilities

150,000

Proceeds from issuance of 3.0% Senior Notes

499,100

Payment of 4.5% Senior Notes

(300,000

)

Payments under revolving credit facilities

(150,000

)

Payments under other long term borrowings

(396

)

(50,057

)

Payment of make-whole redemption premium

(6,756

)

Debt issuance costs

(4,749

)

Dividends paid

(151,838

)

(147,208

)

Proceeds from stock option exercises

44,587

38,809

Repurchases of common stock

(110,342

)

(54,668

)

Shares surrendered for tax withholding

(12,208

)

(12,596

)

Other - net

(1,865

)

Net cash flows used in financing activities

(42,602

)

(227,585

)

Effect of exchange rate changes on cash and cash equivalents

39,176

2,712

Net increase in cash

393,270

166,174

Cash and cash equivalents at beginning of year

632,581

466,407

Cash and cash equivalents at end of period

$

1,025,851

$

632,581

IDEX CORPORATION

Company and Segment Financial Information - Reported

(dollars in thousands)

(unaudited)

For the Quarter Ended
December 31, (a)

For the Year Ended
December 31, (a)

2020

2019

2020

2019

Fluid & Metering Technologies

Net sales

$

229,584

$

227,456

$

896,304

$

957,028

Operating income (b)

58,900

61,763

235,011

285,256

Operating margin

25.7

%

27.2

%

26.2

%

29.8

%

EBITDA(c)

$

66,288

$

67,399

$

261,804

$

306,933

EBITDA margin(c)

28.9

%

29.6

%

29.2

%

32.1

%

Depreciation and amortization

$

6,569

$

5,499

$

25,939

$

22,152

Capital expenditures

3,150

7,078

11,924

17,285

Health & Science Technologies

Net sales

$

235,857

$

227,293

$

895,962

$

914,446

Operating income (b)

55,794

49,113

206,356

200,200

Operating margin

23.7

%

21.6

%

23.0

%

21.9

%

EBITDA(c)

$

66,702

$

58,591

$

248,161

$

237,480

EBITDA margin(c)

28.3

%

25.8

%

27.7

%

26.0

%

Depreciation and amortization

$

10,972

$

10,283

$

41,778

$

39,721

Capital expenditures

6,784

5,800

27,626

22,001

Fire & Safety/Diversified Products

Net sales

$

150,555

$

152,025

$

562,851

$

626,770

Operating income (b)

40,214

39,349

144,191

165,258

Operating margin

26.7

%

25.9

%

25.6

%

26.4

%

EBITDA(c)

$

43,770

$

42,439

$

159,008

$

178,820

EBITDA margin(c)

29.1

%

27.9

%

28.3

%

28.5

%

Depreciation and amortization

$

3,807

$

3,588

$

15,216

$

14,333

Capital expenditures

2,379

1,067

8,913

9,811

Corporate Office and Eliminations

Intersegment sales eliminations

$

(1,174

)

$

(777

)

$

(3,471

)

$

(3,671

)

Operating income (b)

(15,943

)

(16,052

)

(64,845

)

(71,711

)

EBITDA(c)

(14,580

)

(15,784

)

(70,392

)

(69,113

)

Depreciation and amortization (d)

173

160

562

670

Capital expenditures

(206

)

194

3,082

1,815

Company

Net sales

$

614,822

$

605,997

$

2,351,646

$

2,494,573

Operating income

138,965

134,173

520,713

579,003

Operating margin

22.6

%

22.1

%

22.1

%

23.2

%

EBITDA(c)

$

162,180

$

152,645

$

598,581

$

654,120

EBITDA margin(c)

26.4

%

25.2

%

25.5

%

26.2

%

Depreciation and amortization (d)

$

21,521

$

19,530

$

83,495

$

76,876

Capital expenditures

12,107

14,139

51,545

50,912

IDEX CORPORATION

Company and Segment Financial Information - Adjusted

(dollars in thousands)

(unaudited)

For the Quarter Ended
December 31, (a)

For the Year Ended
December 31, (a)

2020

2019

2020

2019

Fluid & Metering Technologies

Net sales

$

229,584

$

227,456

$

896,304

$

957,028

Adjusted operating income (b)(c)

62,047

63,712

244,698

288,135

Adjusted operating margin(c)

27.0

%

28.0

%

27.3

%

30.1

%

Adjusted EBITDA(c)

$

69,435

$

69,348

$

271,491

$

309,812

Adjusted EBITDA margin(c)

30.2

%

30.5

%

30.3

%

32.4

%

Depreciation and amortization

$

6,569

$

5,499

$

25,939

$

22,152

Capital expenditures

3,150

7,078

11,924

17,285

Health & Science Technologies

Net sales

$

235,857

$

227,293

$

895,962

$

914,446

Adjusted operating income (b)(c)

56,374

51,836

209,098

217,789

Adjusted operating margin(c)

23.9

%

22.8

%

23.3

%

23.8

%

Adjusted EBITDA(c)

$

67,282

$

61,314

$

250,903

$

255,069

Adjusted EBITDA margin(c)

28.5

%

27.0

%

28.0

%

27.9

%

Depreciation and amortization

$

10,972

$

10,283

$

41,778

$

39,721

Capital expenditures

6,784

5,800

27,626

22,001

Fire & Safety/Diversified Products

Net sales

$

150,555

$

152,025

$

562,851

$

626,770

Adjusted operating income (b)(c)

40,848

39,790

146,715

166,622

Adjusted operating margin(c)

27.1

%

26.2

%

26.1

%

26.6

%

Adjusted EBITDA(c)

$

44,404

$

42,880

$

161,532

$

180,184

Adjusted EBITDA margin(c)

29.5

%

28.2

%

28.7

%

28.7

%

Depreciation and amortization

$

3,807

$

3,588

$

15,216

$

14,333

Capital expenditures

2,379

1,067

8,913

9,811

Corporate Office and Eliminations

Intersegment sales eliminations

$

(1,174

)

$

(777

)

$

(3,471

)

$

(3,671

)

Adjusted operating income (b)(c)

(15,286

)

(14,203

)

(63,915

)

(69,159

)

Adjusted EBITDA(c)

(13,923

)

(13,935

)

(61,041

)

(66,561

)

Depreciation and amortization(d)

173

160

562

670

Capital expenditures

(206

)

194

3,082

1,815

Company

Net sales

$

614,822

$

605,997

$

2,351,646

$

2,494,573

Adjusted operating income(c)

143,983

141,135

536,596

603,387

Adjusted operating margin(c)

23.4

%

23.3

%

22.8

%

24.2

%

Adjusted EBITDA(c)

$

167,198

$

159,607

$

622,885

$

678,504

Adjusted EBITDA margin(c)

27.2

%

26.3

%

26.5

%

27.2

%

Depreciation and amortization (d)

$

21,521

$

19,530

$

83,495

$

76,876

Capital expenditures

12,107

14,139

51,545

50,912

(a)

Three and twelve month data includes the results of the Flow MD acquisition (February 2020) in the Fluid & Metering Technologies segment and the Velcora acquisition (July 2019) in the Health & Science Technologies segment.

(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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210203005941/en/

Contacts

Investor Contact:
William K. Grogan
Senior Vice President and Chief Financial Officer
(847) 498-7070