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IDEX Reports Record Second Quarter Orders, Sales and Net Income; Double-Digit Organic Sales Growth Across All Business Segments; Third Consecutive Quarter of Double-Digit Base Sales Improvement

NORTHBROOK, Ill.--(BUSINESS WIRE)--July 21, 2005--IDEX Corporation (NYSE:IEX) today announced record financial results for the three months ended June 30, 2005. Orders were up 18 percent, sales increased 16 percent and net income rose 27 percent to an all-time high of $28.9 million. Diluted earnings per share were 55 cents versus 44 cents in the year-ago period.

Second Quarter 2005 Highlights

  • Orders were a record $272.0 million, 18 percent higher than a year ago; base business orders, excluding acquisitions and foreign currency translation, were up 13 percent.
  • Sales of $271.8 million also set a new record and rose 16 percent; base business sales, excluding acquisitions and foreign currency translation, were up 11 percent.
  • Gross margins improved 90 basis points to 41.1 percent of sales, while operating margins at 17.7 percent were 70 basis points higher than a year ago.
  • Net income increased 27 percent to a record $28.9 million.
  • Diluted EPS at 55 cents was 11 cents ahead of the second quarter of 2004.
  • EBITDA of $56.2 million was 20.7 percent of sales and covered interest expense by more than 14 times.
  • Debt-to-total capitalization was 20 percent.
  • Free cash flow was strong at $30.7 million and 1.1 times net income.
  • Operational excellence initiatives continue to fuel product innovation to drive growth.

"We are delighted with our results for the second quarter and first six months of 2005. Our business units continue to deliver profitable sales growth as a result of new product and technology initiatives and our never-ending commitment to operational excellence. During the second quarter, we achieved record orders, sales, and net income, as well as our 14th consecutive quarter of year-over-year gross margin improvement. The quarter also marked our 12th consecutive quarter of year-over-year earnings growth and our 11th consecutive quarter of year-over-year base sales growth. This is now the third straight quarter that we have generated double-digit base sales improvement. During the quarter, all three business segments experienced double-digit organic sales growth. As we move forward, we remain focused on the voice of our customer, while using the powerful combination of continuous process improvement and new product innovation to drive our future performance."

Lawrence D. Kingsley
President and Chief Executive Officer

Second Quarter Financial Highlights
-----------------------------------
(In millions, except per share amounts and percentages)

                                     For the Quarter Ended
                            June 30                       March 31
                        2005      2004     Change     2005     Change
                       --------  --------  -------   --------  -------
Orders Written          $272.0    $230.7     18%      $266.6      2%
Sales                    271.8     233.6     16        252.1      8
Operating Income          48.1      39.8     21         40.7     18
Operating Margin          17.7%     17.0%    70 bp      16.1%   160 bp
Net Income               $28.9     $22.8     27%       $23.6     22%
Diluted EPS                 .55       .44    25           .45    22

Other Data
  Income before Taxes    $44.6     $36.0     24%       $36.9     21%
  Depreciation and
   Amortization            7.8       7.8      -          7.9     (1)
  Interest                 3.8       3.6      5          3.9     (2)
  EBITDA                  56.2      47.4     19         48.7     15

  Cash Flow from
   Operating Activities   36.9      32.7     13         16.3    127
  Capital Expenditures     6.2       4.4     40          5.7      8
  Free Cash Flow          30.7      28.3      9         10.6    191

Q2 Orders, Sales, Net Income and EPS Up Year-over-Year and Sequentially

New orders in the quarter totaled a record $272.0 million, 18 percent higher than the same period in 2004 and up 2 percent sequentially. Excluding the impact of foreign currency translation and acquisitions, orders were 13 percent higher than the second quarter of 2004. As of June 30, 2005, the company had an unfilled order backlog of just over one month's sales.

Record sales in the 2005 second quarter of $271.8 million rose 16 percent from the prior year period and were up 8 percent sequentially. Compared with last year, base business shipments grew 11 percent, acquisitions accounted for a 3 percent improvement, and foreign currency translation added 2 percent. Base business sales grew 16 percent domestically and 6 percent internationally during the quarter. Sales to international customers from base businesses represented approximately 44 percent of total sales for the second quarter of 2005 versus 46 percent in the year-ago quarter.

Second quarter 2005 gross margin of 41.1 percent of sales was 90 basis points higher than last year's second quarter and 70 basis points higher than the first quarter of 2005. This improvement reflects volume leverage and savings realized from the company's Six Sigma, Lean Manufacturing and global sourcing initiatives. Selling, general and administrative (SG&A) expense as a percent of sales increased slightly from the second quarter of 2004 to 23.4 percent. Total SG&A expenses increased due to acquisitions, higher volume, and reinvestment in the business to drive organic growth. Second quarter 2005 operating margin of 17.7 percent of sales was 70 basis points higher than the second quarter of 2004 and 160 basis points ahead of the first quarter of 2005.

Net income of $28.9 million was a new record and increased 27 percent over the second quarter of 2004 and 22 percent sequentially. Diluted earnings per share of 55 cents improved 11 cents from the second quarter of 2004 and were up 10 cents from the first quarter of 2005.

Year-To-Date Financial Results
------------------------------
(In millions, except per share amounts and percentages)

                                         Six  Months Ended June 30
                                     ---------------------------------
                                      2005       2004         Change
                                     --------   --------     ---------
Orders Written                        $538.6     $468.6         15%
Sales                                  523.8      448.2         17
Operating Income                        88.8       71.1         25
Operating Margin                        17.0%      15.9%       110 bp
Net Income                             $52.6      $40.5         30%
Diluted EPS                              1.00        .79        27

Other Data
  Income before Taxes                  $81.5      $63.8         28%
  Depreciation and Amortization         15.7       15.4          2
  Interest                               7.7        7.1          9
  EBITDA                               104.9       86.3         22
  Cash Flow from Operating Activities   53.2       52.2          2
  Capital Expenditures                  11.9        9.8         22
  Free Cash Flow                        41.3       42.4         (3)
    First Half Orders, Sales, Net Income and EPS Ahead of Last Year

New orders for the first six months totaled $538.6 million, 15 percent higher than the first six months of last year. Excluding the impact of foreign currency translation and acquisitions, orders were 9 percent higher in the first six months of 2005 than in 2004.

Sales for the first six months of 2005 increased 17 percent to $523.8 million from $448.2 million a year earlier. Base business sales rose 11 percent, acquisitions accounted for a 4 percent improvement, and foreign currency translation added 2 percent. Base business sales grew 13 percent domestically and were up 8 percent internationally during the first six months of 2005. Sales to international customers from base businesses represented approximately 45 percent of total sales for the first six months of 2005 versus 46 percent for the same period last year.

First half operating margins were 17.0 percent, 110 basis points higher than the 15.9 percent reported in the prior-year period. This improvement reflects volume leverage, along with a 70-basis point improvement in gross margin to 40.8 percent, resulting mainly from the company's global sourcing, Six Sigma and Lean Manufacturing initiatives. Selling, general and administrative expenses as a percent of sales decreased by 40 basis points from the first half of 2004. Higher total SG&A expenses reflect acquisitions, volume-related expenses, and reinvestment in the business to drive organic growth.

Year-to-date net income of $52.6 million increased 30 percent compared to 2004. Diluted earnings per share of $1.00 rose 21 cents, or 27 percent, from the 79 cents recorded for the first half of 2004.

Segment Results

For the second quarter of 2005, Pump Product sales of $158.3 million rose 18 percent, reflecting 12 percent base business growth, a 1 percent favorable impact from foreign currency translation, and a 5 percent increase due to acquisitions. Operating margin of 17.9 percent represented a 60-basis point operating margin improvement compared with the second quarter of 2004.

Dispensing Equipment sales of $53.1 million rose 16 percent, reflecting a 12 percent increase in base business growth and 4 percent favorable foreign currency translation. Operating margin of 24.9 percent represented a 20-basis point operating margin improvement compared to the year-ago quarter.

Sales of Other Engineered Products during the second quarter totaled $61.2 million, an increase of 12 percent, reflecting 10 percent base business growth, 1 percent favorable foreign currency translation, and a 1 percent increase due to acquisitions. Operating margin of 22.9 percent represented a 290-basis point operating margin improvement compared with the year-ago quarter.

Year-to-date, the Pump Products Group contributed 58 percent of sales and 51 percent of operating income; the Dispensing Equipment Group accounted for 20 percent of sales and 24 percent of operating income; and Other Engineered Products represented 22 percent of sales and 25 percent of operating income.

Strong Financial Position

IDEX ended the second quarter with total assets of $1.2 billion and working capital of $134.5 million. Total debt decreased $35.3 million during the first six months of 2005 to $190.1 million. Free cash flow (cash flow from operating activities less capital expenditures) for the first half of 2005 was $41.3 million. Year-to-date, EBITDA (earnings before interest, taxes, depreciation and amortization) totaled $104.9 million (20.0 percent of sales) and covered interest expense by more than 13 times. Debt-to-total capitalization at June 30, 2005, was 20 percent.

Progress Continues on Operational Excellence and Innovation Initiatives

"We're driving operational excellence to reduce cost, improve efficiency and leverage our plant investment," Kingsley said. "Our ongoing commitment to operational excellence enables us to better serve the needs of our customers and expand margins. Our ability to improve efficiency also allows our business units to spend more time developing new products and new markets, which will result in sustainable growth opportunities. We have embraced the innovation and growth concepts of stretch thinking, voice of the customer and the Six Sigma- based design principles.

"We're pleased with our progress during the quarter," Kingsley continued. "Our margin expansion is evidence that our operational excellence strategy is working. Second quarter gross margins of 41.1 percent improved 90 basis points versus last year's second quarter and 70 basis points sequentially. Year-to-date savings from our operational excellence tools of Lean and Six Sigma totaled $5.4 million. Through the first six months of 2005, the net savings from our global sourcing initiatives totaled $6.6 million, a reduction of 25 percent over prior sources. Year-to-date, the percentage of sales derived from new products introduced over the last three years was 20 percent."

2005 Outlook

"We are encouraged by our recent performance and working very hard to build on our business momentum as we move into the second half of 2005," Kingsley said. "Our emphasis on new product innovation and continuous process improvement is clearly delivering top- and bottom-line growth. We are most excited about the number of new business opportunities generated during the quarter. Our growth capability, coupled with our developing know-how for applying the most advanced mixed model operational excellence tools, will continue to enhance our ability to drive operating performance. We are well positioned to meet our customers' emerging needs for applied engineering solutions anywhere in the world."

Conference Call to be Broadcast Over the Internet

IDEX will broadcast its second quarter earnings conference call over the Internet on Thursday, July 21, 2005 at 1:30 p.m. CDT. President and Chief Executive Officer Larry Kingsley and Vice President and Chief Financial Officer Dominic 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 its Web site at www.idexcorp.com. Those who wish to listen 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, or download the correct application at no charge. Investors also will be able to hear a replay of the call by dialing 800.642.1687 or 706.645.9291 using conference ID #6904116.

A Note on EBITDA and Free Cash Flow

EBITDA means earnings before interest, income taxes, depreciation and amortization, while 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 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 and metering products, dispensing equipment for color formulation, and other highly engineered products including fire suppression equipment, rescue tools and engineered band clamping systems. 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 Web site at www.idexcorp.com.

(Tables follow)

                           IDEX CORPORATION
            Condensed Statements of Consolidated Operations
                (in thousands except per share amounts)

                       Second Quarter Ended      Six Months Ended
                           June 30,  (a)           June 30,  (a)
                         2005        2004        2005        2004
----------------------------------------------------------------------

Net sales               $271,758    $233,590    $523,816    $448,190
Cost of sales            160,109     139,667     310,210     268,537
----------------------------------------------------------------------
Gross profit             111,649      93,923     213,606     179,653
Selling, general and
 administrative
 expenses                 63,517      54,109     124,779     108,553
----------------------------------------------------------------------
Operating income          48,132      39,814      88,827      71,100
Other income (expense)
 - net                       245        (235)        375        (224)
Interest expense           3,806       3,619       7,685       7,055
----------------------------------------------------------------------
Income before income
 taxes                    44,571      35,960      81,517      63,821
Provision for income
 taxes                    15,638      13,126      28,939      23,295
----------------------------------------------------------------------
Net income               $28,933     $22,834     $52,578     $40,526
======================================================================


Earnings per Common Share:

Basic earnings per
 common share               $.57        $.46       $1.03        $.81

Diluted earnings per
 common share               $.55        $.44       $1.00        $.79
======================================================================


Share Data:

Basic weighted average
 common shares
 outstanding              50,963      50,060      50,821      49,768

Diluted weighted
 average common shares
 outstanding              52,641      52,037      52,484      51,578
======================================================================


                Condensed Consolidated Balance Sheets
                           (in thousands)
                                               June 30,   December 31,
                                               2005 (a)    2004 (a)
----------------------------------------------------------------------

Assets
  Current assets
    Cash and cash
     equivalents                                  $8,787      $7,274
    Receivables - net                            144,096     119,567
    Inventories                                  126,670     126,978
    Other current
     assets                                       11,408       7,419
----------------------------------------------------------------------
      Total current
       assets                                    290,961     261,238
  Property, plant and
   equipment - net                               148,318     155,602
  Goodwill - net                                 695,129     713,619
  Intangible assets -
   net                                            28,949      29,545
  Other noncurrent
   assets                                         28,665      26,288
----------------------------------------------------------------------
      Total assets                            $1,192,022  $1,186,292
======================================================================

Liabilities and
 shareholders' equity
    Trade accounts
     payable                                     $80,915     $71,405
    Dividends payable                              6,150       6,105
    Accrued expenses                              69,381      70,745
----------------------------------------------------------------------
      Total current
       liabilities                               156,446     148,255
  Long-term debt                                 190,066     225,317
  Other noncurrent
   liabilities                                   100,130      99,115
----------------------------------------------------------------------
      Total
       liabilities                               446,642     472,687
  Shareholders' equity                           745,380     713,605
----------------------------------------------------------------------
      Total
       liabilities and
       shareholders'
       equity                                 $1,192,022  $1,186,292
======================================================================

    See following page for notes to condensed financial statements.


                           IDEX CORPORATION
           Company and Business Group Financial Information
                        (dollars in thousands)

                           Second Quarter Ended    Six Months Ended
                              June 30,  (a)         June 30,  (a)
                             2005       2004       2005       2004
----------------------------------------------------------------------

Pump Products
  Net sales                $158,300   $133,971   $304,598   $255,181
  Operating income (b)       28,413     23,150     52,744     41,950
  Operating margin             17.9 %     17.3 %     17.3 %     16.4 %
  Depreciation and
   amortization              $4,054     $4,318     $8,180     $8,177
  Capital expenditures        4,107      2,868      7,691      6,601

Dispensing Equipment
  Net sales                 $53,117    $45,899   $104,444    $87,518
  Operating income (b)       13,230     11,346     24,808     19,242
  Operating margin             24.9 %     24.7 %     23.8 %     22.0 %
  Depreciation and
   amortization              $1,298     $1,404     $2,596     $2,834
  Capital expenditures          903        765      1,854      1,416

Other Engineered Products
  Net sales                 $61,199    $54,440   $116,771   $106,884
  Operating income (b)       13,988     10,882     25,549     21,551
  Operating margin             22.9 %     20.0 %     21.9 %     20.2 %
  Depreciation and
   amortization              $1,487     $1,671     $3,051     $3,103
  Capital expenditures          995        678      1,786      1,522

Company
  Net sales                $271,758   $233,590   $523,816   $448,190
  Operating income           48,132     39,814     88,827     71,100
  Operating margin             17.7 %     17.0 %     17.0 %     15.9 %
  Depreciation and
   amortization (c)          $7,784     $7,757    $15,661    $15,385
  Capital expenditures        6,160      4,411     11,867      9,759


----------------------------------------------------------------------

(a)Includes acquisitions of Systec (April 2004) and Scivex (May 2004)
   in the Pump Products Group and 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