IDEX(IEX) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Performance Overview The company reported record Q2 sales but revised its full-year guidance downwards due to a more cautious customer outlook Highlights & CEO Commentary IDEX reported strong Q2 execution with record sales, but a cautious customer outlook prompted a reset of its 2025 financial assumptions Q2 2025 Key Metrics | Metric | Value | Change vs. Prior Year | | :--- | :--- | :--- | | Sales | $865 million | +7% reported, +1% organic | | Orders | $830 million | +7% reported, +2% organic | | Reported Diluted EPS | $1.74 | -6% | | Adjusted Diluted EPS | $2.07 | Flat | - CEO Eric D. Ashleman highlighted strong execution but acknowledged a challenging operating environment and a downshift in order trends for rapid-turn businesses exiting the quarter[2][3] - Due to a more cautious customer stance on larger orders, which delayed expected second-half acceleration, the company is resetting its baseline financial assumptions for the rest of 2025[3] Financial Guidance (Q3 & Full Year 2025) The company revised its full-year 2025 guidance downwards, now anticipating approximately 1% organic sales growth Revised 2025 Financial Guidance | Period | Metric | New Guidance | Previous Guidance | | :--- | :--- | :--- | :--- | | Full Year 2025 | GAAP Diluted EPS | $6.30 - $6.44 | $6.56 - $6.95 | | Full Year 2025 | Adjusted Diluted EPS | $7.85 - $7.95 | $8.10 - $8.45 | | Q3 2025 | GAAP Diluted EPS | $1.54 - $1.61 | N/A | | Q3 2025 | Adjusted Diluted EPS | $1.90 - $1.95 | N/A | - The updated full-year guidance is based on an expected organic sales growth of approximately 1%[4] - The third-quarter guidance is based on an expected organic sales growth of 2% to 3%[4] Consolidated Financial Results Q2 2025 saw record net sales driven by an acquisition, but GAAP net income and EPS declined while operating cash flow increased Consolidated Financial Results (Three Months Ended June 30) | Metric (in millions, except EPS) | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $865.4 | $807.2 | +7% | | Organic Sales Growth | - | - | +1% | | Gross Margin | 45.3% | 45.4% | (10) bps | | Net Income (GAAP) | $131.6 | $141.3 | (6.9%) | | Diluted EPS (GAAP) | $1.74 | $1.86 | (6.5%) | | Adjusted Net Income | $156.5 | $156.1 | +0.3% | | Adjusted Diluted EPS | $2.07 | $2.06 | +0.5% | | Adjusted EBITDA | $237.2 | $224.2 | +5.8% | | Cash Flow from Operations | $161.7 | $133.6 | +21.0% | - Net sales growth was largely due to the Mott acquisition, with organic growth driven by positive pricing and initiatives in HST and FSDP segments, partially offset by lower volumes in the FMT segment[7] - The decrease in GAAP Diluted EPS was influenced by higher amortization from the Mott acquisition, higher interest expense, and a higher effective tax rate compared to the prior year[7] - Operating cash flow and free cash flow increased due to higher operating results and favorable working capital, mainly from the timing of collections[8] Segment Financial Results The HST and FSDP segments reported sales growth, driven by acquisitions and pricing, while the FMT segment saw a sales decline Segment Performance (Three Months Ended June 30, 2025) | Segment | Net Sales (M) | Reported Sales Change | Organic Sales Change | Adjusted EBITDA (M) | Adjusted EBITDA Margin | | :--- | :--- | :--- | :--- | :--- | :--- | | Health & Science Technologies | $365.3 | +20% | +4% | $95.0 | 26.0% | | Fluid & Metering Technologies | $310.9 | (3%) | (2%) | $108.7 | 35.0% | | Fire & Safety/Diversified Products | $191.5 | +3% | +2% | $56.4 | 29.4% | Health & Science Technologies (HST) The HST segment's sales growth was primarily driven by the Mott acquisition, though its adjusted EBITDA margin contracted - Organic sales increased 4% due to positive pricing, growth initiatives, and strong volumes in aerospace/defense and pharmaceutical businesses[10] - Growth was partially offset by lower volumes in the semiconductor, automotive, and industrial businesses[10] - Adjusted EBITDA margin decreased to 26.0% primarily due to the impact of the Mott acquisition and unfavorable mix[10] Fluid & Metering Technologies (FMT) The FMT segment experienced a sales decline due to lower volumes in key end markets, but its adjusted EBITDA margin improved - Organic sales decreased 2% due to lower volumes in chemical, water, energy, agriculture, and semiconductor businesses[15] - Adjusted EBITDA margin increased to 35.0% due to positive price/cost and net productivity improvements that outweighed volume deleverage[15] Fire & Safety/Diversified Products (FSDP) The FSDP segment achieved modest sales growth and a slight margin increase, driven by positive pricing and strong OEM demand - Organic sales increased 2% due to positive pricing and strong North America Fire OEM demand[15] - Growth was partially offset by lower volumes related to the timing of Dispensing projects in emerging markets[15] - Adjusted EBITDA margin increased to 29.4% as positive price/cost more than offset unfavorable productivity, mix, and volume deleverage[15] Corporate Costs & Other Items Corporate costs increased due to higher compensation, while the company actively allocated capital to share repurchases and an acquisition - Corporate costs included in consolidated Adjusted EBITDA were $22.9 million, an increase of $1.4 million from the prior year, primarily due to higher employee-related variable compensation[12] - Key capital allocation activities in Q2 2025 and shortly after include repurchasing $50.0 million of shares, repaying a $100.0 million senior note, and acquiring Micro-LAM, Inc. for $90.0 million[15] Financial Statements This section presents the condensed consolidated statements of income, balance sheets, and cash flows for the reporting period Condensed Consolidated Statements of Income Net sales increased in Q2 2025, but higher costs led to a decline in net income and diluted EPS compared to the prior year Q2 Income Statement Highlights (in millions) | Account | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net sales | $865.4 | $807.2 | | Gross profit | $392.2 | $366.8 | | Operating income | $187.9 | $182.7 | | Net income attributable to IDEX | $131.6 | $141.3 | Condensed Consolidated Balance Sheets Total assets and shareholders' equity increased as of June 30, 2025, while total liabilities decreased from year-end 2024 Balance Sheet Summary (in millions) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total current assets | $1,616.5 | $1,592.7 | | Goodwill | $3,368.6 | $3,251.7 | | Total assets | $6,876.1 | $6,745.3 | | Total current liabilities | $529.8 | $629.7 | | Long-term borrowings – net | $1,847.1 | $1,859.5 | | Total liabilities | $2,865.7 | $2,951.2 | | Total shareholders' equity | $4,011.6 | $3,794.7 | Condensed Consolidated Statements of Cash Flows Net cash from operating activities decreased for the six-month period, while financing activities used significant cash for debt repayment and shareholder returns Six-Month Cash Flow Summary (in millions) | Activity | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | | Net cash from operating activities | $267.4 | $290.2 | | Net cash (used in) provided by investing activities | $(24.5) | $11.7 | | Net cash used in financing activities | $(349.2) | $(118.2) | | Net (decrease) increase in cash | $(68.9) | $166.4 | Non-GAAP Measures & Guidance Reconciliation This section explains the company's use of non-GAAP metrics and provides detailed reconciliations to their GAAP equivalents Explanation of Non-GAAP Measures IDEX utilizes non-GAAP metrics like organic sales and adjusted EPS to provide deeper insight into its core operational performance - The company uses non-GAAP metrics to provide greater insight, transparency, and a more comprehensive understanding of financial information used by management[30] - Key non-GAAP metrics include: Organic orders/sales, Adjusted gross profit/margin, Adjusted net income, Adjusted diluted EPS, Consolidated Adjusted EBITDA, and Free cash flow[31] Reconciliations of GAAP to Non-GAAP Results This section provides detailed reconciliations of reported GAAP results to adjusted non-GAAP figures for key financial metrics - For Q2 2025, reported net sales growth of 7% was reconciled to 1% organic growth after accounting for a 5% impact from acquisitions/divestitures and a 1% impact from foreign currency[34] - Q2 2025 reported diluted EPS of $1.74 was adjusted for acquisition-related intangible amortization (+$0.42) and other items to reach an adjusted diluted EPS of $2.07[35] - Q2 2025 reported net income of $131.1 million was reconciled to Adjusted EBITDA of $237.2 million by adding back taxes, interest, D&A, and other adjustments[36] Reconciliations of 2025 Financial Guidance The company provides a bridge from its estimated GAAP EPS and sales growth to its non-GAAP guidance for Q3 and full-year 2025 Full Year 2025 EPS Guidance Reconciliation | Item | Low End | High End | | :--- | :--- | :--- | | Estimated GAAP Diluted EPS | $6.30 | $6.44 | | Restructuring expenses | $0.33 | $0.28 | | Acquisition-related intangible asset amortization | $1.69 | $1.69 | | Tax impacts | $(0.47) | $(0.46) | | Estimated Adjusted Diluted EPS | $7.85 | $7.95 | - The full-year 2025 estimated change in net sales of 5-6% is reconciled to an estimated 1% organic sales growth after accounting for impacts from acquisitions (3%) and foreign currency (1%)[38]