IDEX Corporation (NYSE: IEX) today announced its financial results for the three-month period ended June 30, 2012. New orders in the quarter totaled $466 million, up 4 percent over the prior year period. Sales in the quarter totaled $494 million, 9 percent higher than the prior year period. For the quarter, on an organic basis, orders were 1 percent higher and sales were 6 percent higher than the prior year period. Second quarter 2012 operating income, adjusted for $2.6 million of restructuring related charges, was $91.2 million, resulting in an operating margin of 18.5 percent, up 30 basis points from prior year adjusted operating margin due to higher volume and improved productivity. Excluding the impact of restructuring related charges, second quarter adjusted diluted earnings per share were 67 cents, an increase of 5 cents, or 8 percent, from prior year adjusted EPS. Free cash flow was $71 million for the quarter, a 54 percent increase from the second quarter of the prior year due to improved working capital and higher earnings. Second Quarter Highlights
- Orders increased 4 percent compared to the prior year (+1 percent organic, +6 percent acquisition and -3 percent foreign currency translation).
- Sales increased 9 percent compared to the prior year (+6 percent organic, +6 percent acquisition and -3 percent foreign currency translation).
- Reported net income of $54 million was $4 million, or 8 percent, higher than the prior year. Excluding restructuring related charges, adjusted net income was $56 million or 7 percent higher than prior year adjusted net income.
- Reported diluted EPS of 65 cents was 5 cents, or 8 percent, higher than the prior year EPS. Adjusted EPS of 67 cents was 5 cents, or 8 percent, higher than the prior year adjusted EPS.
- EBITDA of $108 million was 22 percent of sales and covered interest expense by more than 10 times.
- Free cash flow was $71 million, representing a second quarter record and 130 percent of net income. Year-to-date free cash flow continues to be strong – up 86 percent from the prior year.
- The Company completed the repurchase of 626 thousand shares of common stock for $25.9 million. Year-to-date, the Company has returned $118 million of capital through share repurchases, cash dividends and the repayment of debt.
Despite these challenges, our focus on productivity across the organization delivered 18.5 percent operating margin and exceptional cash generation of $71 million, up 54 percent compared to the prior year period. Overall, I am pleased with the team’s ability to navigate through this challenging environment while remaining focused on our customers.Based on current outlook, our projected third quarter 2012 EPS is in the range of 62 to 64 cents. Given the second quarter results and the challenging economic environment, we have revised our full year 2012 outlook downward – we now expect EPS of $2.65 to $2.70, excluding any future restructuring related charges and the impact from the recently announced Matcon acquisition. Full year EPS exceeding the top end of our range would be predicated on continued strong U.S. and emerging markets and a stabilization in Europe.” Andrew K. SilvernailChairman and Chief Executive Officer Second Quarter 2012 Business Highlights (2012 operating margin excludes restructuring related charges) Fluid & Metering Technologies
- Sales in the second quarter of $211 million reflected a 1 percent increase compared to the second quarter of 2011 (+3 percent organic and -2 percent foreign currency translation).
- Operating margin of 22.1 percent represented a 220 basis point improvement compared with the second quarter of 2011 due to productivity.
- Sales in the second quarter of $171 million reflected a 21 percent increase compared to the second quarter of 2011 (+3 percent organic, +19 percent acquisitions and -1 percent foreign currency translation).
- Operating margin of 16.6 percent represented a 470 basis point decrease compared with the second quarter 2011 adjusted operating margin primarily due to the dilutive impact from acquisitions. Excluding the impact from acquisitions, operating margins in 2012 were up 40 basis points compared with 2011.
- Sales in the second quarter of $116 million reflected a 10 percent increase compared to the second quarter of 2011 (+15 percent organic and -5 percent foreign currency translation).
- Operating margin of 23.4 percent represented a 210 basis point decrease compared with the second quarter of 2011 primarily due to a $2.8 million gain on the sale of a facility in 2011. Excluding this gain from 2011, operating margins in 2012 were up 50 basis points compared with 2011.
EBITDA and Free Cash FlowEBITDA means earnings before interest, income taxes, depreciation and amortization, while free cash flow means cash flow from operating activities less capital expenditures plus the excess tax benefit from stock-based compensation. Management uses these non-GAAP financial measures as internal operating metrics and for enterprise valuation purposes. Management believes these measures are useful as analytical indicators of leverage capacity and debt servicing ability, and uses them to measure financial performance as well as for planning purposes. However, they should not be considered as alternatives to net income, cash flow from operating activities or any other items calculated in accordance with U.S. GAAP, or as an indicator of operating performance. The definitions of EBITDA and free cash flow used here may differ from those used by other companies.
|EBITDA and Free Cash Flow bridge||For the Quarter Ended|
|June 30,||March 31,|
|Income before Taxes||$77.9||$73.3||6||%||$74.0||5||%|
|Depreciation and Amortization||19.2||17.0||13||19.2||-|
|Cash Flow from Operating Activities||$80.7||$51.7||56||%||$58.7||37||%|
|Excess Tax Benefit from Stock-Based Compensation||0.3||1.6||(79||)||2.1||(84||)|
|Free Cash Flow||$70.8||$46.1||54||$52.3||35|
About IDEXIDEX Corporation is an applied solutions company specializing in fluid and metering technologies, health and science technologies, and fire, safety and other diversified products built to its customers’ exacting specifications. Its products are sold in niche markets to a wide range of industries throughout the world. IDEX shares are traded on the New York Stock Exchange and Chicago Stock Exchange under the symbol “IEX”. For further information on IDEX Corporation and its business units, visit the company’s website at www.idexcorp.com . (Tables follow)
|Condensed Statements of Consolidated Operations|
|(in thousands except per share amounts)|
|Three Months Ended||Six Months Ended|
|June 30,||June 30,|
|Cost of sales||291,031||268,959||577,559||517,348|
|Selling, general and administrative expenses||111,882||105,210||225,264||206,189|
|Other expense (income) - net||230||(347||)||113||560|
|Income before income taxes||77,884||73,256||151,908||143,616|
|Provision for income taxes||23,533||23,074||45,386||45,483|
|Earnings per Common Share:|
|Basic earnings per common share (a)||$||0.65||$||0.61||$||1.28||$||1.19|
|Diluted earnings per common share (a)||$||0.65||$||0.60||$||1.27||$||1.17|
|Basic weighted average common shares outstanding||83,180||82,151||82,987||81,790|
|Diluted weighted average common shares outstanding||84,090||83,778||83,991||83,507|
|Condensed Consolidated Balance Sheets|
|June 30,||December 31,|
|Cash and cash equivalents||$||221,110||$||230,259|
|Receivables - net||265,209||252,845|
|Other current assets||57,273||51,799|
|Total current assets||798,089||789,161|
|Property, plant and equipment - net||215,673||213,717|
|Goodwill and intangible assets||1,822,444||1,813,588|
|Other noncurrent assets||20,596||19,641|
|Liabilities and shareholders' equity|
|Trade accounts payable||$||114,430||$||110,977|
|Total current liabilities||260,900||258,278|
|Other noncurrent liabilities||262,924||258,328|
|Total liabilities and shareholders' equity||$||2,856,802||$||2,836,107|
|Company and Business Group Financial Information|
|(dollars in thousands)|
|Three Months Ended||Six Months Ended|
|June 30, (b)||June 30, (b)|
|2012||2011 (c)||2012||2011 (c)|
|Fluid & Metering Technologies|
|Net sales||$ 210,715||$ 208,896||$ 423,433||$ 408,570|
|Operating income (d)||46,622||41,486||93,807||83,338|
|Depreciation and amortization||$ 7,408||$ 8,240||$ 14,948||$ 16,238|
|Health & Science Technologies|
|Net sales||$ 170,563||$ 140,474||$ 344,349||$ 269,708|
|Operating income (d) (e)||28,289||29,867||60,014||59,366|
|Depreciation and amortization||$ 9,559||$ 5,990||$ 19,020||$ 10,974|
|Fire & Safety/Diversified Products (c)|
|Net sales||$ 115,924||$ 105,192||$ 219,974||$ 204,079|
|Operating income (d)||27,126||26,865||51,358||48,007|
|Depreciation and amortization||$ 1,824||$ 2,375||$ 3,603||$ 4,717|
|Net sales||$ 494,144||$ 453,798||$ 983,561||$ 880,887|
|Operating income (d)||91,231||82,629||180,738||160,350|
|Depreciation and amortization (f)||$ 19,203||$ 16,954||$ 38,393||$ 32,576|
|(a)||Calculated by applying the two-class method of allocating earnings to common stock and participating securities as required by ASC 260, Earnings Per Share.|
|(b)||Three and six month data includes acquisitions of ERC (April 2012), CVI Melles Griot (June 2011), Microfluidics (March 2011) and Advanced Thin Films (January 2011) in the Health & Science Technologies segment from the date of acquisition.|
|(c)||Financial data for 2011 has been revised to reflect the transfer of our Trebor business unit from the Health & Science Technologies segment to the Fluid & Metering Technologies segment as well as the movement of the Dispensing Equipment segment into the Fire & Safety/Diversified Products segment.|
|(d)||Group operating income excludes unallocated corporate operating expenses while both Group and Company operating income excludes restructuring related charges.|
|(e)||Operating income within the Health & Science Technologies segment excludes a $3.0 million non-cash acquisition fair value inventory charge for the three and six months ended June 30, 2011.|
|(f)||Depreciation and amortization excludes amortization of debt issuance expenses.|