IDEX Reports First Quarter Results; Raises Full Year Guidance; Q1 Orders and Sales up 10 Percent Overall and 6 Percent Organically; Q1 Reported EPS Was $1.48 With Adjusted EPS Of $1.51

IDEX Corporation (NYSE: IEX) today announced its financial results for the three month period ended March 31, 2021.

First Quarter 2021 Highlights

• Record orders and sales were up 10 percent overall and 6 percent organically compared to Q1 2020
• Reported operating margin was 23.9 percent with adjusted operating margin of 24.3 percent
• Reported EPS was $1.48 with adjusted EPS of $1.51
• Record Q1 cash from operations of $109.3 million led to record Q1 free cash flow of $94.7 million
• Full year adjusted EPS guidance raised to $6.05 to $6.20
• Completed the acquisition of ABEL Pumps, L.P. on March 10, 2021
• Reached an agreement in April 2021 to acquire Airtech Group, Inc., US Valve Corporation and related entities (Airtech)

First Quarter 2021

Orders of $710.7 million were up 10 percent compared with the prior year period (+6 percent organic, +1 percent acquisitions and +3 percent foreign currency translation).

Sales of $652.0 million were up 10 percent compared with the prior year period (+6 percent organic, +1 percent acquisitions and +3 percent foreign currency translation).

Gross margin of 44.9 percent was down 80 basis points compared with the prior year period primarily as a result of increases to inventory reserves associated with COVID-19 new product development (NPD) opportunities not materializing, lower margins from the ABEL and Flow MD acquisitions and a fair value inventory step-up charge, partially offset by higher volume and price. Excluding the $0.7 million pre-tax fair value inventory step-up charge related to the ABEL acquisition, adjusted gross margin of 45.0 percent was down 70 basis points compared with the prior year period.

Operating income of $155.5 million resulted in an operating margin of 23.9 percent which was up 40 basis points compared with the prior year period primarily as a result of higher volume, price and cost savings, partially offset by restructuring expenses and asset impairments and lower gross margin. Excluding the $0.7 million pre-tax fair value inventory step-up charge and $2.2 million of restructuring expenses and asset impairments, adjusted operating income was $158.4 million with an adjusted operating margin of 24.3 percent, up 80 basis points compared with the prior year period.

Provision for income taxes of $32.9 million in the first quarter of 2021 resulted in an effective tax rate (ETR) of 22.6 percent, which was higher than the prior year period ETR of 20.0 percent primarily due to a decrease in the excess tax benefits related to share-based compensation.

Net income attributable to IDEX was $112.7 million which resulted in EPS attributable to IDEX of $1.48. Excluding the fair value inventory step-up charge and restructuring expenses and asset impairments, adjusted EPS attributable to IDEX was $1.51, an increase of 18 cents, or 14 percent, from the prior year period. EBITDA of $177.9 million was 27.3 percent of sales and covered interest expense by almost 17 times. Adjusted EBITDA of $180.8 million was 27.7 percent of sales and covered interest expense by almost 17 times.

Cash from operations of $109.3 million was up 29.0 percent from the prior year period primarily due to higher earnings and a favorable impact from the timing of accrued expenses. Cash from operations led to free cash flow of $94.7 million, which was up 32 percent from the prior year period and was 82 percent of adjusted net income attributable to IDEX.

First Quarter 2021 Segment Highlights

Fluid & Metering Technologies

• Sales of $243.4 million reflected a 7 percent increase compared to the first quarter of 2020 (+2 percent organic, +3 percent acquisition and +2 percent foreign currency translation).
• Operating income of $62.9 million resulted in an operating margin of 25.8 percent which was down 360 basis points compared with the prior year period primarily due to increases to inventory reserves associated with COVID-19 NPD opportunities not materializing, lower margins from the ABEL and Flow MD acquisitions, restructuring expenses and asset impairments and the fair value inventory step-up charge, partially offset by higher volume and cost savings. Excluding the $0.7 million pre-tax fair value inventory step-up charge and $0.9 million of restructuring expenses and asset impairments, adjusted operating income was $64.5 million with an adjusted operating margin of 26.5 percent, a 290 basis point decrease compared to the prior year period.
• EBITDA of $69.9 million resulted in an EBITDA margin of 28.7 percent. Excluding the $0.7 million pre-tax fair value inventory step-up charge and $0.9 million of restructuring expenses and asset impairments, adjusted EBITDA of $71.5 million resulted in an adjusted EBITDA margin of 29.4 percent, a 210 basis point decrease compared to the prior year period.

Health & Science Technologies

• Sales of $250.4 million reflected a 12 percent increase compared to the first quarter of 2020 (+9 percent organic and +3 percent foreign currency translation).
• Operating income of $66.7 million resulted in an operating margin of 26.6 percent which was up 310 basis points compared with the prior year period primarily due to higher volume and cost savings, partially offset by restructuring expenses and asset impairments. Excluding $0.6 million of restructuring expenses and asset impairments, adjusted operating income was $67.3 million with an adjusted operating margin of 26.9 percent, a 340 basis point increase compared to the prior year period.
• EBITDA of $77.5 million resulted in an EBITDA margin of 31.0 percent. Excluding $0.6 million of restructuring expenses and asset impairments, adjusted EBITDA of $78.1 million resulted in an adjusted EBITDA margin of 31.2 percent, a 270 basis point increase compared to the prior year period.

Fire & Safety/Diversified Products

• Sales of $159.5 million reflected an 11 percent increase compared to the first quarter of 2020 (+7 percent organic and +4 percent foreign currency translation).
• Operating income of $44.6 million resulted in an operating margin of 27.9 percent which was up 150 basis points compared with the prior year period primarily as a result of higher volume and cost savings. Excluding $0.1 million of restructuring expenses and asset impairments, adjusted operating income was $44.7 million with an adjusted operating margin of 28.0 percent, a 160 basis point increase compared to the prior year period.
• EBITDA of $48.7 million resulted in an EBITDA margin of 30.5 percent. Excluding $0.1 million of restructuring expenses and asset impairments, adjusted EBITDA of $48.8 million resulted in an adjusted EBITDA margin of 30.6 percent, a 140 basis point increase compared to the prior year period.

Corporate Costs

Corporate costs increased to $18.6 million in the first quarter of 2021 from $17.5 million in the first quarter of 2020 primarily as a result of higher acquisition, restructuring and variable compensation expenses.

Acquisition

On March 10, 2021, the Company acquired ABEL Pumps, L.P. and certain of its affiliates (ABEL). 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. Headquartered in Büchen, Germany, with sales and service locations in Madrid, Spain and Pittsburgh, Pennsylvania, ABEL operates in our Pumps reporting unit within the Fluid & Metering Technologies segment. ABEL was acquired for cash consideration of $106.2 million. The entire purchase price was funded with cash on hand.

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 and a fair value inventory step-up charge. 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, 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.
• 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.
• 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.

(1) EBITDA, a non-GAAP financial measure, is reconciled to net income, its most directly comparable GAAP financial measure, immediately above in Table 5.

Conference Call to be Broadcast over the Internet

IDEX will broadcast its first quarter earnings conference call over the Internet on Wednesday, April 28, 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 #13712089.

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 anticipated benefits of the Company’s acquisition of ABEL Pumps, L.P. and certain of its affiliates, and the anticipated continuing effects of the COVID-19 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, liquidity, capital resources, market conditions, global economies and operating improvements, 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 duration of the COVID-19 pandemic and the continuing effects of the COVID-19 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)

View source version on businesswire.com: https://www.businesswire.com/news/home/20210427006140/en/