IDEX Beats Estimate in 3Q - Analyst Blog

By Zacks | October 24, 2012 AAA

IDEX Corporation (IEX) has posted adjusted diluted earnings per share (excluding the effect of the restructuring charge) of 66 cents in the third quarter of 2012 compared to 71 cents in the third quarter of 2011 and 67 cents in the earlier quarter.  The earnings in the reported quarter surpassed the Zacks Consensus Estimate of 64 cents per share and the company's previously provided guidance range of 62 to 64 cents per share for the quarter.

The annual decline in the earnings was primarily due to weak macro-economic condition.

Revenues

Net revenues came to $479.9 million, up 0.6% year over year but down 2.9% sequentially. Orders were down 3% annually to reach $464 million in the third quarter of 2012. The moderated orders were due to the uncertain economic situation.

The Fluid and Metering Technologies (FMT) segment reported sales of $198 million, down 3.8% year over year and 6.0% sequentially. The Health and Science Technologies (HST) segment revenues came in at $176.2 million, surging nearly 2% annually and 3.3% sequentially. The Fire and Safety segment recorded sales of $108.2 million, rising 9.6% annually but down 6.7% sequentially.

Margins

Operating margin (excluding re-structuring charges) in the quarter came to 18.3% remaining flat year over year but declining from 18.5% in the last quarter.

The FMT segment reported operating margin of 21.4%, rising from 20.1% in the last year quarter but down from 22.1% sequentially. The segment's margin was highly influenced by the company's high productivity and cost effective strategy.

The HST segment's operating margin came in at 17.3%, falling from 18.8% in the previous year quarter but rising from 16.6% in the second quarter of 2012. The decline was primarily attributed to the adverse dilutive effects of acquisition activities.

The Fire and Safety products segment recorded an operating margin of 24.8% versus 21.2% in the year-ago quarter and 23.4% in the last quarter. The annual rise was primarily led by the company's augmented productivity and cost effective strategy.

Balance Sheet and Cash Flow

As of September 30, 2012, the company had cash and cash equivalents of $260.5 million, increasing from $221.1 million at the end of the previous quarter. In addition, net receivables came in at $277.5 million, up from $265.2 million at the end of the previous quarter. Long-term debt came down to $782.8 million from $753.7 million at the end of the previous quarter.

Cash provided by operating activities amounted to $101.0 million in the third quarter of 2012 compared to $94.8 million in the previous year quarter. Capital expenditures incurred were $9.4 million, which remained flat year over year.

Share Repurchase

IDEX Corporation has completed repurchase of 1 million shares worth $39 million in the reported quarter. Year-to-date the company bought back a total of 1.9 million shares. The company has also declared its decision to repurchase additional $200 million worth of its common stock.

Acquisition

During the third quarter, the company closed the acquisition of Matcon, Ltd. Now, Matcon will be considered as a subsidiary of the company's Health & Science Technologies segment's Material Process Technologies portal.

Outlook

For the fourth quarter of 2012, the company estimates that the organic revenue will remain flat due to the prevailing weak economic condition.

IDEX Corporation reiterated its EPS guidance for 2012. The company continues to expect that the EPS will lie within the range of $2.65 - $2.70.

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