EX-99.1 2 c19447exv99w1.txt PRESS RELEASE EXHIBIT 99.1 IDEX CORPORATION REPORTS THIRD QUARTER RESULTS; 16% SALES GROWTH, 15% INCREASE IN DILUTED EPS AND STRONG FREE CASH FLOW NORTHBROOK, IL, OCTOBER 18 - IDEX CORPORATION (NYSE: IEX) today announced its financial results for the quarter ended September 30, 2007. From continuing operations, orders in the third quarter were up 15 percent, sales increased 16 percent, and income rose 16 percent to $38.8 million compared to the third quarter of 2006. Diluted earnings per share from continuing operations were 47 cents versus 41 cents in the year-ago quarter. THIRD QUARTER 2007 HIGHLIGHTS (FROM CONTINUING OPERATIONS) - Orders in the third quarter of 2007 were $327.5 million, 15 percent higher than a year ago; excluding foreign currency translation and acquisitions, organic orders growth was 3 percent. - Third quarter sales of $334.9 million rose 16 percent; excluding foreign currency translation and acquisitions, organic sales growth was 5 percent. - Operating margin at 18.9 percent was 10 basis points higher than a year ago. - Income increased 16 percent to $38.8 million. - Diluted EPS at 47 cents was 6 cents or 15 percent ahead of last year. - EBITDA of $73.3 million was 22 percent of sales and covered interest expense by 13 times. - Third quarter free cash flow was $52.2 million. "In the third quarter, we continued to experience strong global demand in our process controls, infrastructure and core health and science end markets. However, our third quarter results were unfavorably impacted by lower demand in the Dispensing Equipment and Fire & Safety/Diversified Products segments. In the Dispensing Equipment segment, we experienced softer than expected demand in the North American small retail channel as well as lower operating margins primarily due to reduced volume, in-quarter operational issues and unfavorable mix. In the Fire & Safety/Diversified Products segment, the results were impacted by lower OEM demand for fire suppression equipment. "For the fourth quarter of 2007, projected organic growth rates in the Fluid & Metering Technologies and Health & Science Technologies segments are 6-8 percent and 3-5 percent, respectively. In the Dispensing Equipment segment, the projected fourth quarter organic growth rate of 4-6 percent reflects improvement from the third quarter due to planned replenishment orders in the North American large retail channel. The projected fourth quarter organic growth rate in the Fire & Safety/Diversified Products segment of 4-5 percent is consistent with third quarter performance, as we anticipate continued softness in the North American fire suppression market. "Given these trends, current market conditions and the impact from currency and recent acquisitions, we expect fourth quarter sales growth of 12 to 15 percent and EPS of 46 to 49 cents per diluted share. The EPS estimate range as stated includes a projected unfavorable impact of one to two cents from estimated severance and field service expenses in the fourth quarter." Lawrence D. Kingsley Chairman and Chief Executive Officer THIRD QUARTER FINANCIAL RESULTS (Dollars in millions, except per share amounts)
FOR THE QUARTER ENDED -------------------------------------------- September 30, --------------- June 30, 2007 2006 Change 2007 Change ------ ------ ------ -------- ------ ORDERS WRITTEN $327.5 $285.6 15% $339.3 (3)% SALES 334.9 289.8 16 344.5 (3) OPERATING INCOME 63.1 54.4 16 68.9 (8) OPERATING MARGIN 18.9% 18.8% 10bp 20.0% (110)bp INCOME FROM CONTINUING OPERATIONS $ 38.8 $ 33.3 16% $ 41.8 (7)% NET INCOME 38.4 46.0 (16) 41.6 (8) DILUTED EPS: INCOME FROM CONTINUING OPERATIONS .47 .41 15 .51 (8) NET INCOME .47 .57 (18) .51 (8) OTHER DATA (FROM CONTINUING OPERATIONS) - Income before Taxes $ 58.0 $ 51.5 13% $ 63.3 (8)% - Depreciation and Amortization 9.8 6.6 49 9.3 5 - Interest 5.5 3.4 64 6.1 (9) - EBITDA 73.3 61.5 19 78.7 (7) - Cash Flow from Operating Activities 58.6 40.8 44 63.8 (8) - Capital Expenditures 7.4 6.3 17 7.4 -- - Excess Tax Benefit from Stock-Based Compensation 1.0 .3 302 1.9 (45) - Free Cash Flow 52.2 34.8 50 58.3 (10)
Q3 ORDERS, SALES, INCOME AND EPS FROM CONTINUING OPERATIONS INCREASE YEAR-OVER-YEAR New orders in the quarter totaled $327.5 million, 15 percent higher than the same period in 2006. Excluding the impact of acquisitions and foreign currency translation, orders were up 3 percent. The organic order growth rate in the third quarter was unfavorably impacted by timing of anticipated OEM orders. Sales in the third quarter of $334.9 million increased 16 percent from the prior-year period. Excluding the impact of acquisitions and foreign currency translation, organic growth was 5 percent. Sales to international customers represented approximately 46 percent of total sales for the third quarter of 2007 versus 45 percent in the same period of 2006. Third quarter operating margin was 18.9 percent, 10 basis points higher than the 18.8 percent reported in the prior-year period. Gross margin of 41.1 percent was 10 basis points higher than the third quarter of 2006. Selling, general and administrative expenses as a percent of sales were 22.2 percent, flat compared to the prior year. Margin improvement from volume leverage, strategic sourcing and operational excellence initiatives were offset by lower operating performance in the Dispensing Equipment segment. Income from continuing operations of $38.8 million increased 16 percent over the third quarter of 2006. Diluted earnings per share from continuing operations of 47 cents improved 6 cents, or 15 percent, from the third quarter of 2006. YEAR-TO-DATE FINANCIAL RESULTS (Dollars in millions, except per share amounts)
NINE MONTHS ENDED SEPTEMBER 30 ------------------------------ 2007 2006 Change -------- ------ ------ ORDERS WRITTEN $1,026.8 $869.6 18% SALES 1,012.6 852.8 19 OPERATING INCOME 193.6 158.2 22 OPERATING MARGIN 19.1% 18.5% 60bp INCOME FROM CONTINUING OPERATIONS $ 117.5 $ 97.5 20% NET INCOME 116.7 111.0 5 DILUTED EPS: INCOME FROM CONTINUING OPERATIONS 1.43 1.21 18 NET INCOME 1.42 1.37 4 OTHER DATA - Income before Taxes $ 177.1 $148.6 19% - Depreciation and Amortization 28.3 20.7 37 - Interest 18.0 10.4 73 - EBITDA 223.4 179.7 24 - Cash Flow from Operating Activities 138.2 109.6 26 - Capital Expenditures 20.2 16.0 26 - Excess Tax Benefit from Stock-Based Compensation 4.7 4.9 (4) - Free Cash Flow 122.7 98.5 25
NINE MONTH ORDERS, SALES, INCOME AND EPS FROM CONTINUING OPERATIONS AHEAD OF LAST YEAR New orders for the first nine months of 2007 totaled $1,026.8 million, 18 percent higher than the first nine months of last year. Excluding the impact of acquisitions and foreign currency translation, orders in the first nine months of 2007 were 6 percent higher than in 2006. Sales for the first nine months of 2007 increased 19 percent to $1,012.6 million from $852.8 million a year earlier. Excluding the impact of acquisitions and foreign currency translation, organic growth was 6 percent. Sales to international customers represented approximately 45 percent of total sales for the first nine months of both 2007 and 2006. First nine months operating margin was 19.1 percent, 60 basis points higher than the 18.5 percent reported in the prior-year period. Gross margin improved 70 basis points to 42.0 percent, while selling, general and administrative expenses as a percent of sales of 22.9 percent increased 10 basis points from the first nine months of 2006, reflecting acquisitions and reinvestment in the business to drive organic growth. Year-to-date income from continuing operations of $117.5 million increased 20 percent compared to 2006. Diluted earnings per share from continuing operations of $1.43 rose 22 cents, or 18 percent, from the $1.21 recorded for the first nine months of 2006. SEGMENT RESULTS Fluid & Metering Technologies sales in the third quarter of $143.8 million reflected 35 percent growth (25 percent acquisitions, 9 percent organic and 1 percent foreign currency translation). Strong global demand for infrastructure-related applications, coupled with acquisitions, drove the sales growth within the segment. Operating margin of 21.9 percent represented a 30 basis point improvement compared with the third quarter of 2006. Health & Science Technologies sales in the third quarter of $83.3 million reflected 3 percent growth (2 percent organic and 1 percent foreign currency translation). Growth in core analytical instrumentation, IVD and biotechnology markets was offset by slow growth in specific pneumatic OEM markets. In addition, the exiting of two specific, maturing OEM contracts continues to negatively impact growth. Operating margin of 20.1 percent represented a 230 basis point improvement compared with the third quarter of 2006, primarily driven by favorable mix. Dispensing Equipment sales of $38.1 million in the third quarter was relatively flat compared with the third quarter of 2006 (-5 percent organic offset by 5 percent foreign currency translation). Slower North American demand driven by softness in the small retail channel coupled with timing of large retail replenishment programs contributed to lower than expected performance. Operating margin of 14.7 percent represented a 750 basis point decline compared with the third quarter of 2006, as a result of reduced volume, operational issues, product quality-driven field service costs, unfavorable product mix and severance expenses. Fire & Safety/Diversified Products sales in the third quarter of $70.6 million reflected 8 percent growth (5 percent organic and 3 percent foreign currency translation). The engineered band clamping business achieved strong growth, offset by weak demand in the North American fire suppression market. Operating margin of 23.4 percent represented a 90 basis point decline compared with the third quarter of 2006, due to volume decline in fire suppression and unfavorable product mix. For the third quarter of 2007, Fluid & Metering Technologies contributed 43 percent of sales and 45 percent operating income; Health & Science Technologies accounted for 25 percent of sales and 24 percent of operating income; Dispensing Equipment accounted for 11 percent of sales and 8 percent of operating income; and Fire & Safety/Diversified Products represented 21 percent of sales and 23 percent of operating income. STRONG FINANCIAL POSITION IDEX ended the quarter with total assets of $1.8 billion and working capital of $125.8 million. Total borrowings were $304.0 million at September 30, 2007. Free cash flow (cash flow from operating activities less capital expenditures plus the excess tax benefit from stock-based compensation) for the first nine months of 2007 was $122.7 million. Year-to-date, 2007 EBITDA (earnings before interest, taxes, depreciation and amortization) totaled $223.4 million (22 percent of sales) and covered interest expense by more than 12 times. Debt-to-total capitalization at September 30, 2007, was 21 percent. CONFERENCE CALL TO BE BROADCAST OVER THE INTERNET IDEX will broadcast its third quarter earnings conference call over the Internet on Thursday, October 18, 2007 at 1:30 p.m. CT. 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 #5708545. 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". IDEX CORPORATION ADD -5- IDEX CORPORATION CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
THIRD QUARTER ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------- --------------------- 2007 2006 2007 2006 -------- -------- ---------- -------- NET SALES $334,884 $289,848 $1,012,634 $852,809 COST OF SALES 197,219 171,083 587,771 500,990 -------- -------- ---------- -------- GROSS PROFIT 137,665 118,765 424,863 351,819 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 74,517 64,352 231,298 193,644 -------- -------- ---------- -------- OPERATING INCOME 63,148 54,413 193,565 158,175 OTHER INCOME - NET 437 501 1,531 770 INTEREST EXPENSE 5,537 3,366 17,974 10,368 -------- -------- ---------- -------- INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 58,048 51,548 177,122 148,577 PROVISION FOR INCOME TAXES 19,231 18,215 59,639 51,044 -------- -------- ---------- -------- INCOME FROM CONTINUING OPERATIONS 38,817 33,333 117,483 97,533 INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX (350) (306) (719) 528 NET GAIN (LOSS) ON SALE OF DISCONTINUED OPERATIONS, NET OF TAX (55) 12,969 (55) 12,969 -------- -------- ---------- -------- INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX (405) 12,663 (774) 13,497 -------- -------- ---------- -------- NET INCOME $ 38,412 $ 45,996 $ 116,709 $111,030 ======== ======== ========== ======== BASIC EARNINGS PER COMMON SHARE: CONTINUING OPERATIONS $ 0.48 $ 0.42 $ 1.46 $ 1.23 DISCONTINUED OPERATIONS -- 0.16 (0.01) 0.17 -------- -------- ---------- -------- NET INCOME $ 0.48 $ 0.58 $ 1.45 $ 1.40 ======== ======== ========== ======== DILUTED EARNINGS PER COMMON SHARE: CONTINUING OPERATIONS $ 0.47 $ 0.41 $ 1.43 $ 1.21 DISCONTINUED OPERATIONS -- 0.16 (0.01) 0.16 -------- -------- ---------- -------- NET INCOME $ 0.47 $ 0.57 $ 1.42 $ 1.37 ======== ======== ========== ======== SHARE DATA: BASIC WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 80,832 79,689 80,563 79,389 DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 82,311 80,957 82,005 80,897 ======== ======== ========== ========
CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)
SEPTEMBER 30, DECEMBER 31, 2007 2006 ------------- ------------ ASSETS CURRENT ASSETS CASH AND CASH EQUIVALENTS $ 74,992 $ 77,941 RECEIVABLES - NET 193,457 166,485 INVENTORIES 178,622 160,687 ASSETS HELD FOR SALE -- 829 OTHER CURRENT ASSETS 19,209 11,966 ---------- ---------- TOTAL CURRENT ASSETS 466,280 417,908 PROPERTY, PLANT AND EQUIPMENT - NET 170,788 165,949 GOODWILL AND INTANGIBLE ASSETS 1,135,479 1,083,963 OTHER NONCURRENT ASSETS 4,733 3,001 ---------- ---------- TOTAL ASSETS $1,777,280 $1,670,821 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES TRADE ACCOUNTS PAYABLE $ 86,769 $ 75,444 ACCRUED EXPENSES 89,377 95,170 SHORT-TERM BORROWINGS 154,578 8,210 LIABILITIES HELD FOR SALE -- 373 DIVIDENDS PAYABLE 9,775 8,055 ---------- ---------- TOTAL CURRENT LIABILITIES 340,499 187,252 LONG-TERM BORROWINGS 149,448 353,770 OTHER NONCURRENT LIABILITIES 169,063 150,527 ---------- ---------- TOTAL LIABILITIES 659,010 691,549 SHAREHOLDERS' EQUITY 1,118,270 979,272 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,777,280 $1,670,821 ========== ==========
-more- IDEX CORPORATION ADD -6- IDEX CORPORATION COMPANY AND BUSINESS GROUP FINANCIAL INFORMATION (DOLLARS IN THOUSANDS)
THIRD QUARTER ENDED NINE MONTHS ENDED SEPTEMBER 30, (A) SEPTEMBER 30, (A) ------------------- --------------------- 2007 2006 2007 2006 -------- -------- ---------- -------- FLUID & METERING TECHNOLOGIES NET SALES $143,842 $106,251 $ 421,642 $316,011 OPERATING INCOME (B) 31,559 22,957 91,443 64,362 OPERATING MARGIN 21.9% 21.6% 21.7% 20.4% DEPRECIATION AND AMORTIZATION $ 4,310 $ 2,142 $ 12,428 $ 6,882 CAPITAL EXPENDITURES 2,883 1,280 8,992 3,515 HEALTH & SCIENCE TECHNOLOGIES NET SALES $ 83,266 $ 81,252 $ 246,356 $225,572 OPERATING INCOME (B) 16,703 14,488 45,733 41,281 OPERATING MARGIN 20.1% 17.8% 18.6% 18.3% DEPRECIATION AND AMORTIZATION $ 3,316 $ 2,460 $ 8,162 $ 6,303 CAPITAL EXPENDITURES 1,207 1,025 3,987 3,408 DISPENSING EQUIPMENT NET SALES $ 38,145 $ 37,955 $ 135,897 $123,778 OPERATING INCOME (B) 5,625 8,425 31,577 30,443 OPERATING MARGIN 14.7% 22.2% 23.2% 24.6% DEPRECIATION AND AMORTIZATION $ 854 $ 544 $ 2,431 $ 2,609 CAPITAL EXPENDITURES 694 794 2,448 1,984 FIRE & SAFETY/DIVERSIFIED PRODUCTS NET SALES $ 70,592 $ 65,233 $ 212,596 $191,001 OPERATING INCOME (B) 16,533 15,844 50,008 45,766 OPERATING MARGIN 23.4% 24.3% 23.5% 24.0% DEPRECIATION AND AMORTIZATION $ 1,235 $ 1,425 $ 4,289 $ 4,503 CAPITAL EXPENDITURES 829 2,332 2,528 5,098 COMPANY NET SALES $334,884 $289,848 $1,012,634 $852,809 OPERATING INCOME 63,148 54,413 193,565 158,175 OPERATING MARGIN 18.9% 18.8% 19.1% 18.5% DEPRECIATION AND AMORTIZATION (C) $ 9,826 $ 6,592 $ 28,305 $ 20,687 CAPITAL EXPENDITURES 7,794 6,282 20,924 15,985
---------- (a) Nine month data includes acquisition of Faure Herman (February 2007) and Quadro (June 2007) in the Fluid & Metering Technologies Group, 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.