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IDEX Corporation Reports Record Results for 2006; Continued Strong Organic Growth, Margin Expansion and Cash Flow

NORTHBROOK, Ill.--(BUSINESS WIRE)--Jan. 30, 2007--IDEX Corporation (NYSE:IEX) today announced its financial results for the three- and twelve-month periods ended December 31, 2006. From continuing operations, orders in the fourth quarter were up 25 percent, sales increased 19 percent, and income rose 28 percent to $36.2 million. Diluted earnings per share from continuing operations were 67 cents versus 53 cents in the year-ago quarter. Fourth quarter 2006 results include stock option expense of $1.5 million. From continuing operations, full year 2006 orders increased 16 percent, sales rose 14 percent and diluted earnings per share were $2.48 versus $2.06 in 2005.

Full Year 2006 Highlights (from Continuing Operations)

  • Orders for 2006 were $1.18 billion, 16 percent higher than a year ago; excluding foreign currency translation and acquisitions, organic orders growth was 10 percent.
  • Full year sales of $1.15 billion rose 14 percent; excluding foreign currency translation and acquisitions, organic sales growth was 9 percent.
  • Operating margins at 18.8 percent were 90 basis points higher than a year ago.
  • Stock option expense of $7.6 million had a 70 basis point impact on operating margin during the year.
  • Income increased 23 percent to $133.7 million.
  • Diluted EPS at $2.48 was 42 cents or 20 percent ahead of last year.
  • EBITDA of $248.3 million was 21 percent of sales and covered interest expense by 15 times.
  • Free cash flow was strong at $144.5 million and 1.1 times income.
  • Five strategic acquisitions were completed during the year, including the most recent acquisition, as previously announced, of Toptech Systems on December 1, 2006.
  • Operational and commercial excellence initiatives continue to fuel product innovation to drive growth.
"In 2006, our businesses again delivered very strong financial results, highlighted by 10 percent organic orders growth and 9 percent organic sales growth, coupled with the completion of 5 acquisitions. For the year, organic sales growth was led by our Health & Science Technologies and Fluid & Metering Technologies businesses which grew 13 percent and 10 percent, respectively. We continue to complement our organic growth with strategic acquisitions, such as recently-acquired Toptech Systems. Toptech is an applied solutions provider specializing in controls and software for downstream energy applications, as well as other high-value fluid systems. As we move forward, our businesses are well positioned in attractive product segments supported by strong underlying industry fundamentals. We are leveraging operational and commercial excellence, while continuously innovating to more effectively serve our customers and expand our market position."

Lawrence D. Kingsley Chairman and Chief Executive Officer

2006 Financial Highlights
(Dollars in millions, except per share amounts and percentages)
----------------------------------------------------------------------

                                        Year Ended December 31
                                    2006       2005      Change
                                 ---------- ---------- ----------
Orders Written                    $1,184.5   $1,024.7         16   %
Sales                              1,154.9    1,011.3         14
Operating Income                     217.2      181.0         20
Operating Margin                      18.8 %     17.9 %       90  bp
Income from Continuing Operations   $133.7     $108.6         23   %
Net Income                           146.7      109.8         34
Diluted EPS:
  Income from Continuing
   Operations                         2.48       2.06         20
  Net Income                          2.72       2.08         31
Other Data
    -- Income before Taxes          $201.9     $167.2         21   %
    -- Depreciation and
     Amortization                     30.0       26.3         14
    -- Interest                       16.4       14.4         14
    -- EBITDA                        248.3      207.9         19
    -- Cash Flow from Operating
     Activities                      159.9      142.9         12
    -- Capital Expenditures           21.2       22.5         (6)
    -- Excess Tax Benefit from
     Stock-Based Compensation          5.8          -          -
    -- Free Cash Flow                144.5      120.4         20

2006 Orders, Sales, Income, and EPS from Continuing Operations Well Ahead of Last Year

New orders for full year 2006 totaled $1.18 billion, 16 percent higher than 2005. Excluding the impact of acquisitions and foreign currency translation, orders in 2006 were 10 percent higher than in 2005.

Sales for 2006 increased 14 percent to $1.15 billion from $1.01 billion a year earlier. Excluding the impact of acquisitions and foreign currency translation, organic growth was 9 percent. Sales to international customers represented approximately 45 percent of total sales for both 2006 and 2005.

Full year 2006 operating margin was 18.8 percent, 90 basis points higher than the 17.9 percent reported in the prior year. This improvement reflects volume leverage, along with a 40 basis point improvement in gross margin to 41.3 percent, resulting mainly from strategic sourcing and other operational excellence initiatives. Selling, general and administrative expenses as a percent of sales improved 50 basis points from 2005. Higher total SG&A expenses reflect acquisitions, volume-related expenses, stock option expense and reinvestment in the business to drive organic growth. Stock option expense impacted operating margins by 70 basis points in 2006.

Income from continuing operations of $133.7 million increased 23 percent in 2006 compared to 2005. Diluted earnings per share from continuing operations of $2.48 rose 42 cents, or 20 percent, from the $2.06 recorded for 2005.

Fourth Quarter Financial Results
(Dollars in millions, except per share amounts and percentages)
----------------------------------------------------------------------

                                   For the Quarter Ended
                         December 31                 September 30
                      ------------------           -----------------
                        2006      2005    Change     2006    Change
                      --------- -------- --------  -------- --------
Orders Written          $314.9   $251.1       25  % $285.6       10  %
Sales                    302.1    252.9       19     289.8        4
Operating Income          59.0     46.8       26      54.4        8
Operating Margin          19.5 %   18.5 %    100 bp   18.8 %     70 bp
Income from Continuing
 Operations              $36.2    $28.3       28  %  $33.3        9  %
Net Income                35.6     28.7       24      46.0      (23)
Diluted EPS:
  Income from
   Continuing
   Operations              .67      .53       26       .62        8
  Net Income               .66      .54       22       .85      (22)

Other Data
    -- Income before
     Taxes               $53.3    $43.7       22  %  $51.5        3  %
    -- Depreciation
     and Amortization      9.3      6.2       49       6.6       41
    -- Interest            6.0      3.2       88       3.4       78
    -- EBITDA             68.6     53.1       29      61.5       11
    -- Cash Flow from
     Operating
     Activities           50.3     42.6       18      40.8       23
    -- Capital
     Expenditures          5.2      5.7       (9)      6.3      (17)
    -- Excess Tax
     Benefit from
     Stock-Based
     Compensation          0.9        -        -       0.3        -
    -- Free Cash Flow     46.0     36.9       25      34.8       32

Q4 Orders, Sales, Income and EPS from Continuing Operations Up Year-over-Year

New orders in the quarter totaled $314.9 million, 25 percent higher than the same period in 2005. Excluding the impact of acquisitions and foreign currency translation, orders were up 12 percent.

Sales in the fourth quarter of $302.1 million increased 19 percent from the prior-year period. Excluding the impact of acquisitions and foreign currency translation, organic growth was 7 percent, led by Fluid & Metering Technologies at 10 percent. Sales to international customers represented approximately 45 percent of total sales for the fourth quarter of 2006 versus 44 percent in the same period of 2005.

Fourth quarter operating margin was 19.5 percent, 100 basis points higher than the 18.5 percent reported in the prior-year period. Gross margin of 41.6 percent was 70 basis points higher than the fourth quarter of 2005. Strategic sourcing and other operational excellence initiatives drove the gross margin improvement. Selling, general and administrative expenses as a percent of sales improved 30 basis points to 22.1 percent in the fourth quarter of 2006. Higher total SG&A expenses reflect acquisitions, volume-related expenses, stock option expense and reinvestment in the business to drive organic growth. Stock option expense impacted operating margins by 50 basis points in the fourth quarter of 2006.

Income from continuing operations of $36.2 million increased 28 percent over the fourth quarter of 2005. Diluted earnings per share from continuing operations of 67 cents improved 14 cents, or 26 percent, from the fourth quarter of 2005. The effective tax rate in the fourth quarter of 2006 was favorably impacted by the December renewal of the U.S. Federal Research and Development Tax Credit.

Segment Results

Fluid & Metering Technologies orders in the fourth quarter of $124.1 million reflected 14 percent organic growth, while sales in the fourth quarter of $119.5 million reflected 10 percent organic growth. Operating margin of 21.4 percent represented a 160 basis point improvement compared with the fourth quarter of 2005.

Health & Science Technologies orders in the fourth quarter of $78.5 million reflected 10 percent organic growth, while sales in the fourth quarter of $79.3 million reflected 7 percent organic growth. Operating margin of 21.4 percent represented a 150 basis point improvement compared with the fourth quarter of 2005.

Dispensing Equipment orders in the fourth quarter of $39.8 million reflected 5 percent organic growth. Sales of $36.0 million in the fourth quarter reflected flat year-over-year organic growth due primarily to the timing of deliveries related to project-based orders in North America. Operating margin of 21.0 percent represented a 30 basis point improvement compared with the fourth quarter of 2005.

Fire & Safety/Diversified Products orders in the fourth quarter of $74.3 million reflected 16 percent organic growth, while sales of $69.1 million in the fourth quarter reflected 6 percent organic growth. Operating margin of 24.5 percent represented a 120 basis point decline compared with the fourth quarter of 2005, due in part to start up costs in the company's new China production facility.

For the full year 2006, Fluid & Metering Technologies contributed 38 percent of sales and 36 percent operating income; Health & Science Technologies accounted for 26 percent of sales and 24 percent of operating income; Dispensing Equipment accounted for 14 percent of sales and 15 percent of operating income; and Fire & Safety/Diversified Products represented 22 percent of sales and 25 percent of operating income.

Discontinued Operations

During the fourth quarter, the company recognized a $0.5 million loss from discontinued operations resulting primarily from the company's decision to sell its Halox product line.

Strong Financial Position

IDEX ended the year with total assets of $1.67 billion and working capital of $239 million. Total borrowings were $362 million at December 31, 2006. Free cash flow (cash flow from operating activities less capital expenditures plus the excess tax benefit from stock-based compensation) for 2006 was $144 million. Full year 2006 EBITDA (earnings before interest, taxes, depreciation and amortization) totaled $248 million (21 percent of sales) and covered interest expense by more than 15 times. Debt-to-total capitalization at year-end was 27 percent.

Progress Continues on Growth Initiatives: Operational and Commercial Excellence

"IDEX's broad-based growth stems from our ability to expand our served application base through operational and commercial excellence," Kingsley said. "We continue to reinvest in product innovation, incorporating stretch thinking to completely understand our customers' application and the final use and requirements of their products, as well as goal deployment to ensure we execute. Our focus on fluidics solutions and other carefully targeted engineered product segments is enabling organic growth opportunities in all four business segments. Our businesses are doing a terrific job of bringing new products to market, faster, to enable us to effectively serve new industry applications.

"Our operating mindset, which centers on Mixed Model Lean, similarly enables us to flexibly respond to new market and new customer product requirements, as well as changing customer needs," Kingsley continued. "We continue to reduce plant cycle times and total lead times, so that our customers remain competitive. Our other operational excellence and strategic sourcing initiatives continue to improve our total operating efficiency and allow us to further leverage our plant investment.

"We're also pleased with our progress toward applying an expanded operational and commercial excellence toolset," Kingsley continued. "Our customer metrics and margin expansion are evidence that our strategy is working. The fourth quarter operating margin improved to 19.5 percent, 100 basis points ahead of the year-ago quarter. Excluding the impact of stock option expense, the improvement was 150 basis points."

Acquisition of Toptech Systems

As previously announced, on December 1, 2006, IDEX completed the acquisition of Toptech Systems, Inc., a leading provider of terminal automation systems used in the custody transfer and control of high-value fluids and gases. Based in Longwood, Florida, with revenues of approximately $22 million, Toptech's products include terminal automation hardware and software used by customers in the oil, gas and refined fuels markets to control and manage inventories, as well as transactional data and invoicing. Toptech is now operated as part of the company's Liquid Controls business within its Fluid & Metering Technologies segment.

"Toptech's expertise in terminal automation and management is highly complementary to our precision metering capability and growth within the oil, gas and alternative fuels markets," Kingsley said. "With the addition of Toptech, IDEX now offers a robust platform of controls complementing our market-leading products which enable our customers to move, measure, and dispense high-value fluids anywhere in the world."

2007 Outlook

"This continues to be an exciting time for IDEX," Kingsley concluded. "As we enter 2007, our business fundamentals are very strong. We are as focused as ever on generating organic growth and reinvesting in new products, markets and acquisitions that complement our existing businesses. Our health and science segment now represents 26 percent of our total revenue base and continues to expand rapidly. Our fluid and metering business is meeting both existing and emerging industrial infrastructure needs which are growing worldwide. We continue to enjoy an excellent market position and strong cash generation within our dispensing, fire and safety, and engineered band clamping businesses. Across the company, we are using operational and commercial excellence to better serve our customers, leverage our growth and further enable the success of our niche market strategy."

Conference Call to be Broadcast over the Internet

IDEX will broadcast its fourth quarter earnings conference call over the Internet on Tuesday, January 30, 2007 at 1:30 p.m. CST. Chairman 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 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 also will be able to hear a replay of the call by dialing 800.642.1687 or 706.645.9291 and using conference ID #5707350.

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 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.

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 an applied solutions company specializing in fluid and metering technologies, health and science technologies, dispensing equipment, 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 Web site at www.idexcorp.com.

(Tables follow)

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

                        Fourth Quarter Ended         Year Ended
                            December 31,            December 31,
                          2006        2005        2006        2005
----------------------------------------------------------------------

Net sales               $302,131     $252,866  $1,154,940  $1,011,253
Cost of sales            176,543      149,338     677,533     597,286
----------------------------------------------------------------------
Gross profit             125,588      103,528     477,407     413,967
Selling, general and
 administrative
 expenses                 66,557       56,760     260,201     232,935
----------------------------------------------------------------------
Operating income          59,031       46,768     217,206     181,032
Other income - net           270           78       1,040         557
Interest expense           5,985        3,176      16,353      14,370
----------------------------------------------------------------------
Income from continuing
 operations before
 income taxes             53,316       43,670     201,893     167,219
Provision for income
 taxes                    17,127       15,343      68,171      58,644
----------------------------------------------------------------------
Income from continuing
 operations               36,189       28,327     133,722     108,575
Income (loss) from
 discontinued
 operations, net of tax     (234)         383         294       1,228
Net gain (loss) on sale
 of discontinued
 operations, net of tax     (314)           -      12,655           -
----------------------------------------------------------------------
Income (loss) from
 discontinued
 operations, net of tax     (548)         383      12,949       1,228
----------------------------------------------------------------------
Net income               $35,641      $28,710    $146,671    $109,803
======================================================================


Basic Earnings per Common Share:
Continuing operations      $0.68        $0.54       $2.52       $2.11
Discontinued operations    (0.01)        0.01        0.25        0.03
----------------------------------------------------------------------
Net income                 $0.67        $0.55       $2.77       $2.14
======================================================================

Diluted Earnings per Common Share:
Continuing operations      $0.67        $0.53       $2.48       $2.06
Discontinued operations    (0.01)        0.01        0.24        0.02
----------------------------------------------------------------------
Net income                 $0.66        $0.54       $2.72       $2.08
======================================================================


Share Data:

Basic weighted average
 common shares
 outstanding              53,293       52,306      53,018      51,392

Diluted weighted
 average common shares
 outstanding              54,186       53,492      53,984      52,720
======================================================================


                Condensed Consolidated Balance Sheets
                            (in thousands)
                                             December 31, December 31,
                                                 2006         2005
----------------------------------------------------------------------
Assets
  Current assets
    Cash and cash equivalents                    $77,941      $77,201
    Receivables - net                            166,485      129,428
    Inventories                                  160,687      123,281
    Assets held for sale                             829       10,099
    Other current assets                          15,292       10,962
----------------------------------------------------------------------
  Total current assets                           421,234      350,971
  Property, plant and equipment - net            165,949      142,485
  Goodwill and intangible assets               1,083,963      720,014
  Other noncurrent assets                          2,625       30,710
----------------------------------------------------------------------
      Total assets                            $1,673,771   $1,244,180
======================================================================

Liabilities and shareholders' equity
  Current liabilities
    Trade accounts payable                       $75,444      $66,859
    Accrued expenses                              90,328       72,180
    Short-term borrowings                          8,210        3,144
    Liabilities held for sale                        373        4,792
    Dividends payable                              8,055        6,321
----------------------------------------------------------------------
  Total current liabilities                      182,410      153,296
  Long-term borrowings                           353,770      156,899
  Other noncurrent liabilities                   158,319      110,975
----------------------------------------------------------------------
    Total liabilities                            694,499      421,170
  Shareholders' equity                           979,272      823,010
----------------------------------------------------------------------
      Total liabilities and shareholders'
       equity                                 $1,673,771   $1,244,180
======================================================================
                           IDEX CORPORATION
           Company and Business Group Financial Information
                        (dollars in thousands)

                     Fourth Quarter Ended           Year Ended
                         December 31,              December 31,
                    2006 (a)       2005       2006 (a)       2005
----------------------------------------------------------------------


Fluid & Metering
 Technologies
Net sales            $119,522      $94,475     $435,532     $383,163
  Operating income
   (b)                 25,538       18,684       89,899       72,596
  Operating margin       21.4 %       19.8 %       20.6 %       18.9 %
  Depreciation and
   amortization        $3,642       $2,274      $10,524       $9,824
  Capital
   expenditures         1,972        1,742        5,487        8,204

Health & Science
 Technologies
  Net sales           $79,320      $62,520     $304,892     $235,499
  Operating income
   (b)                 16,948       12,440       58,229       43,133
  Operating margin       21.4 %       19.9 %       19.1 %       18.3 %
  Depreciation and
   amortization        $2,740       $1,432       $9,043       $5,917
  Capital
   expenditures         1,318        1,230        4,726        5,525

Dispensing
 Equipment
  Net sales           $36,015      $34,309     $159,794     $158,111
  Operating income
   (b)                  7,577        7,102       38,021       37,772
  Operating margin       21.0 %       20.7 %       23.8 %       23.9 %
  Depreciation and
   amortization        $1,252       $1,151       $3,861       $4,376
  Capital
   expenditures           378          853        2,362        3,383

Fire &
 Safety/Diversified
 Products
  Net sales           $69,079      $62,833     $260,080     $238,992
  Operating income
   (b)                 16,898       16,143       62,664       56,593
  Operating margin       24.5 %       25.7 %       24.1 %       23.7 %
  Depreciation and
   amortization        $1,583       $1,352       $6,086       $5,712
  Capital
   expenditures           962        1,719        6,060        4,365

Company
  Net sales          $302,131     $252,866   $1,154,940   $1,011,253
  Operating income     59,031       46,768      217,206      181,032
  Operating margin       19.5 %       18.5 %       18.8 %       17.9 %
  Depreciation and
   amortization (c)    $9,269       $6,226      $29,956      $26,254
  Capital
   expenditures         5,213        5,742       21,198       22,532

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

(a)Fourth quarter and twelve month data includes acquisition of Banjo
 (October 2006) and Toptech (December 2006) in the Fluid & Metering
 Technologies Group, while twelve month data also includes JUN-AIR
 (February 2006) and EPI (May 2006) in the Health & Science
 Technologies Group and Airshore (January 2006) in the Fire &
 Safety/Diversified Products Group from the dates of acquisition.

(b)Group operating income excludes unallocated corporate operating
 expenses.

(c)Excludes amortization of debt issuance expenses and unearned
 compensation.

CONTACT: IDEX Corporation
Susan H. Fisher, 847-498-7070

SOURCE: IDEX Corporation