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IDEX Reports Third Quarter Adjusted EPS Of 66 Cents, Record Free Cash Flow And An Additional $200 Million Share Repurchase Authorization

IDEX Corporation (NYSE: IEX) today announced its financial results for the three-month period ended September 30, 2012.

New orders in the quarter totaled $464 million, down 3 percent from the prior year period. Sales in the quarter totaled $480 million, 1 percent higher than the prior year period. For the quarter, on an organic basis, orders were 4 percent lower and sales were 1 percent higher than the prior year period.

Third quarter 2012 operating income, adjusted for $7.1 million of restructuring related charges, was $87.7 million, resulting in an adjusted operating margin of 18.3 percent, equal to the prior year adjusted operating margin.

Excluding the impact of restructuring related charges in both years and the acquisition fair value inventory charge in the prior year, third quarter adjusted earnings per share were 66 cents, a decrease of 5 cents, or 7 percent. The unfavorable year-over-year variance is primarily the result of two one-off items – a prior year benefit from CEO forfeited equity compensation and a true-up of the 2011 year-to-date tax rate.

Free cash flow was $92 million for the quarter, a 7 percent increase from the third quarter of the prior year due to higher operating income and improved working capital.

Additionally, the Company’s Board of Directors has increased the authorized level for repurchases of common stock by $200 million. The increased authorization will be added to the approximately $50 million that remains available from the existing authorization approved by the Board of Directors in December 2011. Repurchases under the program will be funded with future cash flow generation.

Third Quarter Highlights
  • Orders decreased 3 percent compared to the prior year (-4 percent organic, +3 percent acquisition and -2 percent foreign currency translation).
  • Sales increased 1 percent compared to the prior year (+1 percent organic, +2 percent acquisition and -2 percent foreign currency translation).
  • Reported net income of $50 million was $2 million, or 4 percent, higher than the prior year. Excluding restructuring related charges, adjusted net income was $55 million or 7 percent lower than prior year adjusted net income.
  • Reported EPS of 60 cents was 2 cents, or 3 percent, higher than the prior year EPS. Adjusted EPS of 66 cents was 5 cents, or 7 percent, lower than the prior year adjusted EPS.
  • EBITDA of $100 million was 21 percent of sales and covered interest expense by nearly 10 times.
  • Free cash flow was $92 million, representing a record and over 180 percent of net income. Year-to-date free cash flow continues to be strong – up 41 percent from the prior year.
  • During the quarter, the Company completed another strategic acquisition, Matcon, a global leader in material processing solutions in the Pharmaceuticals, Food, Plastics and Fine Chemicals industries.
  • The Company completed the repurchase of 1 million shares of common stock for $39 million in the third quarter. Over two percent of the outstanding shares of common stock, or 1.9 million shares, have been purchased by the Company in 2012.

“We achieved solid profit performance and excellent cash generation in the third quarter in a difficult global environment. Third quarter adjusted EPS of 66 cents exceeded our expectations, primarily as a result of our continued focus on improved productivity and structural cost reductions. Our operating model and team have proven their ability to excel in this environment, which is evident by the 18.3 percent operating margins and record free cash flow generation of $92 million.

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