NORTHBROOK, Ill.--(BUSINESS WIRE)--Oct. 21, 2004--IDEX Corporation
(NYSE:IEX) today reported record sales and net income for the three-
and nine-month periods ended September 30, 2004. Diluted earnings per
share for the third quarter were 44 cents, up 33 percent from the
third quarter of 2003. Earnings per diluted share for the first nine
months of 2004 were $1.23, up 32 percent versus the first nine months
of 2003.
Third Quarter Highlights
-- Orders written were $235.0 million, 21 percent higher than a
year ago; base business orders - excluding acquisitions and
foreign currency translation - were up 9 percent.
-- Record sales of $237.6 million increased 20 percent from last
year; base business sales in the quarter - excluding
acquisitions and foreign currency - were up 9 percent.
-- Gross margins improved 140 basis points to 40.0 percent, while
operating margins at 16.8 percent were 210 basis points higher
than last year.
-- Net income rose 41 percent year-over-year to a record $23.2
million.
-- Diluted EPS of 44 cents was 11 cents ahead of last year.
-- EBITDA for the quarter of $47.5 million was 20 percent of
sales and covered interest expense by more than 12 times.
-- Debt-to-total capitalization at September 30 was 29 percent.
-- Free cash flow was strong at $37.0 million and 1.6 times net
income.
-- During the quarter, IDEX acquired Tianjin Dinglee, the leading
manufacturer of rescue tools in China, in a strategic
expansion of its global rescue tools business.
-- Operational excellence initiatives remain on track, fueling
new product innovation to drive growth.
"We are pleased to report continued progress and growth in the
third quarter of 2004. Our business units again delivered with record
sales and earnings and our 11th consecutive quarter of year-over-year
gross margin expansion. The period also marked our 9th consecutive
quarter of year-over-year earnings growth and our 8th consecutive
quarter of year-over-year organic sales growth. We are especially
pleased with the organic revenue growth of 9 percent. All three
segments experienced organic growth led by our Pump Products business.
Our recent performance reflects improved economic conditions, as well
as the success of our efforts to drive growth through new product
innovation, our focus on meeting critical-to-customer needs, and our
expanding global presence. Although the short cycle nature of our
business limits our visibility on the remainder of the year, we are
using all the tools at our disposal to drive future growth,
profitability and cash generation." Dennis K. Williams Chairman,
President and CEO
Third Quarter Financial Highlights
(In millions, except per share amounts and percentages)
For the Quarter Ended
---------------------------------
Sept. Sept. 30, June 30,
30, --------------------------
2004 2003 Change 2004 Change
---------------------------------
Orders Written $235.0 $193.7 21%$230.7 2%
Sales 237.6 197.3 20 233.6 2
Operating Income 40.0 28.9 38 39.8 -
Operating Margin 16.8% 14.7% 210bp 17.0%(20)bp
Net Income $23.2 $16.5 41% $22.8 2%
Diluted EPS .44 .33 33 .44 -
Other Data
--Income before Taxes $35.7 $25.6 40% $36.0 (1)%
--Depreciation and
Amortization 7.9 7.5 6 7.8 2
--Interest 3.9 3.4 15 3.6 7
--EBITDA 47.5 36.5 30 47.4 -
--Cash Flow from Operating
Activities 42.0 43.2 (3) 32.7 28
--Capital Expenditures 5.0 5.2 (3) 4.4 14
--Free Cash Flow 37.0 38.0 (3) 28.3 31
Third Quarter Orders, Sales and Net Income Increase Year-Over-Year
New orders in the third quarter totaled $235.0 million, 21 percent
higher than the same period of 2003. Excluding the impact of foreign
currency translation and acquisitions, orders were 9 percent higher
than the third quarter of 2003. At September 30, 2004, IDEX had an
unfilled order backlog of just over one month's sales.
Sales in the third quarter were $237.6 million, a 20 percent
increase over the third quarter of 2003. Compared with last year, base
business shipments grew 9 percent, foreign currency translation
provided a 3 percent improvement, and acquisitions accounted for an 8
percent increase. Base business sales grew 13 percent domestically and
were up 4 percent internationally during the recent quarter. Sales to
international customers from base business represented 42 percent of
the total, compared with 44 percent last year.
Third quarter gross margin of 40.0 percent of sales was 140 basis
points higher than the third quarter of 2003. The third quarter 2004
operating margin was 16.8 percent of sales, 210 basis points higher
than last year. The increase in operating margin is attributable to
increased sales volume across all three segments and the continuing
favorable impact of savings realized from the company's Global
Sourcing, Six Sigma, Kaizen and Lean Manufacturing initiatives. Total
SG&A expense for the third quarter of $55.0 million increased from
$47.2 million a year earlier primarily due to acquisitions and volume,
while SG&A as a percent of sales declined to 23.2 percent of sales
from 23.9 percent in the third quarter of 2003.
Net income of $23.2 million, an all-time quarterly high, increased
41 percent over last year's third quarter. Diluted earnings per share
of 44 cents improved 11 cents from last year.
Year-to-Date Financial Highlights
(In millions, except per share amounts and percentages)
Nine Months Ended
September 30,
---------------------
2004 2003 Change
---------------------
Orders Written $703.6 $604.0 16 %
Sales 685.7 600.0 14
Operating Income 111.1 81.9 36
Operating Margin 250
16.2% 13.7% bp
Net Income $63.7 $46.1 38%
Diluted EPS 1.23 .93 32
Other Data
--Income before Taxes $99.5 $71.5 39%
--Depreciation and Amortization 23.3 22.9 2
--Interest 10.9 10.7 2
--EBITDA 133.7 105.1 27
--Cash Flow from Operating Activities 94.2 90.3 4
--Capital Expenditures 14.8 13.6 9
--Free Cash Flow 79.4 76.7 4
Year-to-Date Orders, Sales, Net Income, and EPS Ahead of Last Year
New orders for the first nine months totaled $703.6 million and
were 16 percent higher than last year. Excluding the impact of foreign
currency translation and acquisitions since the beginning of 2003,
orders were 8 percent higher in the first nine months of 2004 than in
2003.
Sales for the first nine months of 2004 increased 14 percent to
$685.7 million from $600.0 million a year earlier. Acquisitions
accounted for a 6 percent improvement, foreign currency translation
added 3 percent, and base business sales rose 5 percent. Base business
sales grew 9 percent domestically and 2 percent internationally during
the first nine months of 2004. For the first nine months of the year,
base business sales to international customers were 44 percent of
total sales, compared with 45 percent in 2003.
Year-to-date operating margins were 16.2 percent, 250 basis points
higher than the 13.7 percent reported in the prior-year period. This
improvement reflects volume leverage, along with a 130 basis point
improvement in gross margin to 40.1 percent, resulting mainly from the
company's Global Sourcing, Six Sigma, Kaizen and Lean Manufacturing
initiatives. Higher total SG&A expenses year-over-year reflect
acquisitions, volume-related expenses, and reinvestment in the
businesses to drive organic growth. Through the first nine months of
2004, SG&A expenses as a percent of sales declined to 23.9 percent
versus 25.1 percent for the first nine months of 2003.
Year-to-date net income of $63.7 million increased 38 percent over
last year. Diluted earnings per share of $1.23 rose 30 cents, or 32
percent, from the 93 cents recorded in the first nine months of 2003.
Segment Results
For the third quarter, Pump Product sales of $142.4 million rose
24 percent compared to 2003, reflecting 11 percent base business
growth, a 2 percent favorable impact from currency translation, and an
11 percent increase due to acquisitions. Operating profit of $26.3
million increased 41 percent and represented a 230 basis point
operating margin improvement compared with the third quarter of 2003,
primarily attributable to volume leverage and the impact of
operational excellence initiatives.
Dispensing Equipment sales in the third quarter of $40.0 million
increased 9 percent, reflecting a 4 percent increase due to currency
translation and a 5 percent increase in base business. Operating
profit of $7.3 million increased 25 percent and represented a 240
basis point operating margin improvement compared with a year ago, due
primarily to volume leverage and the company's operational excellence
initiatives.
Sales of Other Engineered Products during the third quarter
totaled $56.0 million, an increase of 21 percent, reflecting 8 percent
base business growth, 4 percent favorable foreign currency
translation, and a 9 percent improvement due to acquisitions.
Operating profit of $12.5 million increased 44 percent and represented
a 360 basis point operating margin improvement compared with the
year-ago quarter, largely attributable to volume and the impact of
operational excellence initiatives.
Year-to-date, the Pump Products Group contributed 58 percent of
sales and 53 percent of operating income; the Dispensing Equipment
Group accounted for 18 percent of sales and 21 percent of operating
income; and Other Engineered Products represented 24 percent of sales
and 26 percent of operating income.
Strong Financial Position and Free Cash Flow
IDEX ended the third quarter with total assets of $1.2 billion and
working capital of $115.5 million. Total debt increased $87.7 million
during the first nine months of 2004. The increase reflects the
previously announced acquisitions of Manfred Vetter (January 2004);
Systec (April 2004); Scivex (May 2004); and Tianjin Dinglee (July
2004), partially offset by free cash flow generation during the
period. Free cash flow (cash flow from operating activities less
capital expenditures) for the first nine months of 2004 was $79.4
million. Year-to-date, EBITDA (earnings before interest, taxes,
depreciation and amortization) totaled $133.7 million (20 percent of
sales) and covered interest expense by more than 12 times.
Debt-to-total capitalization at September 30, 2004, was 29 percent.
Dinglee Acquisition - Expansion of Rescue Tools Business in China
During the third quarter, IDEX acquired Tianjin Dinglee, based in
Tianjin, China, outside of Beijing. "We are delighted to welcome
Dinglee, the leading manufacturer of rescue tools in the small,
rapidly growing, Chinese rescue tools market," said Williams. "This
acquisition gives our rescue tools business a truly global presence
-Germany, the United States, and China. Dinglee's manufacturing,
product development capabilities, and established market channels
considerably strengthen our ability to penetrate the Asian rescue tool
and fire suppression markets with both locally manufactured and
imported products. At the same time, Dinglee is well positioned to be
a component supplier to our North American and European rescue tools
businesses."
Progress Continues on Operational Excellence Initiatives
"We continue to use our long-term initiatives to create top- and
bottom-line growth," Williams said. "Our drive for rapid process
improvement is increasing the gross margin. Year-to-date, the gross
margin is just over 40 percent. Six Sigma, Kaizen and Lean
Manufacturing, and Global Sourcing continue to contribute to our
margin expansion. Year-to-date 2004 savings from Six Sigma, Kaizen and
Lean totaled $8.6 million, while year-to-date Global Sourcing savings
were $10.0 million, representing a savings of 26 percent versus our
prior sources."
2004 Outlook: Results Depend on Pace of New Orders, Speed of
Recovery
Looking ahead, Williams said, "Economic conditions during the
first nine months of 2004 improved considerably from a year ago. We
are pleased with our results year-to-date and anticipate a
continuation of favorable business conditions as we enter the fourth
quarter. As a short cycle business, however, our financial performance
remains reliant on the current pace of incoming orders. Although we
have limited visibility on future business conditions, we believe IDEX
is well positioned for earnings growth as the economy improves, based
on our lower cost levels resulting from our operational excellence
initiatives. At the same time, we continue to invest in new products,
applications and global markets, while pursuing strategic acquisitions
to drive the company's longer-term profitable growth."
Conference Call to be Broadcast Over the Internet
IDEX will broadcast its third quarter conference call over the
Internet on Thursday, October 21, at 1:30 p.m. CDT. Chairman,
President and Chief Executive Officer Dennis K. Williams and Vice
President and Chief Financial Officer Dominic A. Romeo 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 presentation,
which will be carried live on the Internet at its Web site:
www.idexcorp.com. To hear the live call, log on to the site several
minutes before the discussion begins. After clicking on the
presentation icon, investors should follow the instructions to ensure
their systems are set up for the event, or download the correct
applications at no charge. Investors will be able to access a replay
of the call through November 4 at the IDEX site or by dialing
888-568-0915 (or 402-998-1592 for international participants) using
the pass code "IDEX."
A Note on EBITDA and Free Cash Flow
EBITDA means earnings before interest, income taxes, depreciation
and amortization, and free cash flow means cash flow from operating
activities less capital expenditures. Management uses these non-GAAP
financial measures as internal operating metrics. 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 being used by other companies.
Forward-Looking Statements
This news release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Exchange Act of 1934, as amended. These statements
may relate to, among other things, capital expenditures, cost
reductions, cash flow, and operating improvements and are indicated by
words or phrases such as "anticipate," "estimate," "plans," "expects,"
"projects," "should," "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: 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 IDEX's results,
particularly in light of the low levels of order backlogs it typically
maintains; its 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; 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. 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.
Investors are cautioned not to rely unduly on forward-looking
statements when evaluating the information presented here.
About IDEX
IDEX Corporation is the world leader in fluid-handling
technologies for positive displacement pumps, dispensing equipment for
color formulation, and other highly engineered products including fire
suppression equipment, rescue tools, and stainless steel custom
banding. Its products are sold 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 Web site at www.idexcorp.com.
IDEX CORPORATION
Condensed Statements of Consolidated Operations
(in thousands except per share amounts)
Third Quarter Ended Nine Months Ended
September 30, (a) September 30, (a)
2004 2003 2004 2003
----------------------------------------------------------------------
Net sales $237,557 $197,314 $685,747 $599,959
Cost of sales 142,568 121,136 411,105 367,355
----------------------------------------------------------------------
Gross profit 94,989 76,178 274,642 232,604
Selling, general and
administrative
expenses 55,028 47,235 163,581 150,703
----------------------------------------------------------------------
Operating income 39,961 28,943 111,061 81,901
Other (expense) income
- net (384) 5 (608) 366
Interest expense 3,856 3,352 10,911 10,721
----------------------------------------------------------------------
Income before income
taxes 35,721 25,596 99,542 71,546
Provision for income
taxes 12,502 9,087 35,797 25,399
----------------------------------------------------------------------
Net income $23,219 $16,509 $63,745 $46,147
======================================================================
Earnings per Common
Share:
Basic earnings per
common share $.46 $.34 $1.28 $.95
Diluted earnings per
common share $.44 $.33 $1.23 $.93
======================================================================
Share Data:
Basic weighted average
common shares
outstanding 50,293 48,992 49,943 48,668
Diluted weighted
average common shares
outstanding 52,400 50,460 51,837 49,749
======================================================================
Condensed Consolidated Balance Sheets
(in thousands)
September 30, December 31,
2004 (a) 2003 (a)
----------------------------------------------------------------------
Assets
Current assets
Cash and cash
equivalents $6,360 $8,552
Receivables - net 126,781 101,859
Inventories 124,688 105,304
Other current
assets 7,150 8,781
----------------------------------------------------------------------
Total current
assets 264,979 224,496
Property, plant and
equipment - net 151,900 147,095
Goodwill - net 700,038 559,008
Intangible assets -
net 29,245 19,401
Other noncurrent
assets 16,227 10,739
----------------------------------------------------------------------
Total $1,162,389 $960,739
======================================================================
Liabilities and
shareholders' equity
Trade accounts
payable $71,445 $56,252
Dividends payable 6,074 4,622
Accrued expenses 71,912 54,807
----------------------------------------------------------------------
Total current
liabilities 149,431 115,681
Long-term debt 264,252 176,546
Other noncurrent
liabilities 87,886 76,410
----------------------------------------------------------------------
Total
liabilities 501,569 368,637
Shareholders' equity 660,820 592,102
----------------------------------------------------------------------
Total $1,162,389 $960,739
======================================================================
See following page for notes to condensed financial statements.
IDEX CORPORATION
Company and Business Group
Financial Information
(dollars in thousands)
Third Quarter Ended Nine Months Ended
September 30, (a) September 30, (a)
2004 2003 2004 2003
----------------------------------------------------------------------
Pump Products
Net sales $142,358 $114,906 $397,539 $339,047
Operating income (b) 26,284 18,649 68,234 50,436
Operating margin 18.5 % 16.2 % 17.2 % 14.9 %
Depreciation and
amortization $4,290 $4,139 $12,467 $12,630
Capital expenditures 3,234 3,796 9,835 9,083
Dispensing Equipment
Net sales $40,028 $36,791 $127,546 $123,557
Operating income (b) 7,348 5,878 26,590 20,587
Operating margin 18.4 % 16.0 % 20.8 % 16.7 %
Depreciation and
amortization $1,384 $1,390 $4,218 $4,459
Capital expenditures 545 582 1,961 1,655
Other Engineered Products
Net sales $56,005 $46,364 $162,889 $139,526
Operating income (b) 12,501 8,660 34,052 24,581
Operating margin 22.3 % 18.7 % 20.9 % 17.6 %
Depreciation and
amortization $1,546 $1,389 $4,649 $3,989
Capital expenditures 940 723 2,462 2,658
Company
Net sales $237,557 $197,314 $685,747 $599,959
Operating income 39,961 28,943 111,061 81,901
Operating margin 16.8 % 14.7 % 16.2 % 13.7 %
Depreciation and
amortization (c) $7,950 $7,520 $23,335 $22,887
Capital expenditures 5,046 5,207 14,805 13,614
----------------------------------------------------------------------
(a) Includes acquisitions of Sponsler (June 2003), Classic Engineering
(September 2003), Systec (April 2004) and Scivex (May 2004) in the
Pump Products Group and Manfred Vetter (January 2004) and Tianjin
Dinglee (July 2004) in the Other Engineered Products Group from
the dates of acquisition.
(b) Group operating income excludes unallocated corporate operating
expenses.
(c) Excludes amortization of debt issuance expenses.
CONTACT:IDEX Corporation
Susan H. Fisher (Investor Relations), 847-498-7070
SOURCE: IDEX Corporation
