IDEX(IEX) - 2025 Q2 - Quarterly Report

Part I. Financial Information Financial Statements Unaudited financial statements for H1 2025 show increased net sales but decreased net income and operating cash flow, with asset growth Condensed Consolidated Statements of Income Q2 and H1 2025 income statements show net sales growth but a decline in net income attributable to IDEX Q2 2025 vs Q2 2024 Income Statement Highlights (in millions USD) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net sales | $865.4 | $807.2 | +7.2% | | Gross profit | $392.2 | $366.8 | +6.9% | | Operating income | $187.9 | $182.7 | +2.8% | | Net income attributable to IDEX | $131.6 | $141.3 | -6.9% | | Diluted EPS | $1.74 | $1.86 | -6.5% | H1 2025 vs H1 2024 Income Statement Highlights (in millions USD) | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Net sales | $1,679.7 | $1,607.7 | +4.5% | | Gross profit | $761.1 | $724.2 | +5.1% | | Operating income | $329.9 | $343.9 | -4.1% | | Net income attributable to IDEX | $227.1 | $262.7 | -13.5% | | Diluted EPS | $3.00 | $3.46 | -13.3% | Condensed Consolidated Balance Sheets Balance sheets show total assets increased to $6.88 billion, while total liabilities decreased, and shareholders' equity grew Balance Sheet Summary (in millions USD) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $568.2 | $620.8 | | Inventories – net | $487.8 | $429.7 | | Goodwill | $3,368.6 | $3,251.7 | | Total assets | $6,876.1 | $6,745.3 | | Liabilities & Equity | | | | 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 H1 2025 cash flow from operations decreased, while cash used in investing and financing activities significantly increased Six-Month Cash Flow Summary (in millions USD) | Cash Flow Activity | H1 2025 | H1 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 | - The decrease in operating cash flow was primarily driven by a $45.6 million increase in inventories, compared to a $19.8 million increase in the prior year period[22] - Financing activities in H1 2025 included $100.0 million for common stock repurchases and $100.0 million for payment of long-term borrowings, activities not present or smaller in H1 2024[22] Notes to Condensed Consolidated Financial Statements Notes detail accounting policies, recent acquisitions, segment performance, restructuring expenses, and share repurchase activities Note 2. Acquisitions and Divestitures Details on the July 2025 Micro-LAM acquisition, the 2024 Mott acquisition, and the 2024 Alfa Valvole divestiture - On July 29, 2025, the Company acquired Micro-LAM, Inc. for $90.0 million cash, plus a potential earnout of up to $12.0 million, to be part of the Health & Science Technologies segment[30] - The acquisition of Mott Corporation in September 2024 for $982.0 million resulted in the recognition of $488.2 million in goodwill and $412.8 million in intangible assets[31][32] - The company completed the sale of Alfa Valvole in June 2024 for proceeds of $45.5 million, recognizing a gain of $4.6 million[37] Note 3. Business Segments Q2 2025 segment performance shows sales growth in HST and FSDP, a decline in FMT, and varied Adjusted EBITDA changes Segment Net Sales (Q2 2025 vs Q2 2024, in millions USD) | Segment | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Health & Science Technologies (HST) | $363.9 | $303.0 | | Fluid & Metering Technologies (FMT) | $310.5 | $318.9 | | Fire & Safety/Diversified Products (FSDP) | $191.0 | $185.3 | Segment Adjusted EBITDA (Q2 2025 vs Q2 2024, in millions USD) | Segment | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Health & Science Technologies (HST) | $95.0 | $84.2 | | Fluid & Metering Technologies (FMT) | $108.7 | $107.7 | | Fire & Safety/Diversified Products (FSDP) | $56.4 | $53.8 | Note 8. Borrowings Total borrowings decreased to $1.86 billion due to debt repayment, with $540.6 million available under the revolving facility - Total borrowings decreased from $1,971.3 million at Dec 31, 2024 to $1,857.9 million at June 30, 2025[62] - The $100.0 million 3.37% Senior Notes were repaid upon maturity in June 2025 using cash on hand and a temporary draw on the Revolving Facility[62] - At June 30, 2025, the company had $540.6 million of available borrowing capacity under its Revolving Facility and was in compliance with all debt covenants[62] Note 10. Restructuring Expenses and Asset Impairments H1 2025 restructuring actions resulted in $18.2 million in pre-tax charges, primarily for severance, with more expected H1 2025 Restructuring Expenses by Segment (in millions USD) | Segment | Severance Costs | Total Charges | | :--- | :--- | :--- | | Health & Science Technologies | $11.4 | $12.1 | | Fluid & Metering Technologies | $4.2 | $4.2 | | Fire & Safety/Diversified Products | $1.6 | $1.6 | | Corporate/Other | $0.3 | $0.3 | | Total | $17.5 | $18.2 | - The 2025 restructuring initiative is designed to connect scalable groups of businesses, self-fund growth resources, improve agility, and position the company closer to customers[72] - An additional $3 million to $7 million in restructuring charges, primarily for severance, is expected in the remainder of 2025[73] Note 12. Share Repurchases In H1 2025, the company repurchased 0.5 million shares for $100.9 million, with $439.7 million remaining for future repurchases - In H1 2025, the company repurchased 0.5 million shares for $100.9 million (including taxes)[80] - As of June 30, 2025, the remaining share repurchase authorization was $439.7 million[80] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 2025 performance, highlighting sales growth from acquisitions, declining EPS, and changes in cash flow and liquidity Overview Q2 2025 saw record net sales and organic growth, but diluted EPS declined due to acquisition-related costs amid market uncertainty - Q2 2025 delivered strong operating performance despite persistent macroeconomic uncertainty[104] - Customer ordering patterns showed caution, with delays in larger commitments due to market uncertainty[105] Q2 2025 Financial Highlights | Metric | Value | Change vs Q2 2024 | | :--- | :--- | :--- | | Net Sales | $865.4M | +7% | | Organic Sales | - | +1% | | Reported Diluted EPS | $1.74 | -6% | | Adjusted Diluted EPS | $2.07 | Flat | Results of Operations Q2 2025 net sales increased due to acquisitions, but higher SG&A and interest expenses led to a decline in net income - Net sales for Q2 2025 increased 7% YoY, primarily due to contributions from the Mott acquisition, while organic sales increased 1%[109] - SG&A expenses for H1 2025 increased by $33.5 million from acquisitions (net of divestitures), including amortization[111] - Net interest expense for Q2 2025 increased 93% to $15.6 million due to higher debt outstanding used to finance the Mott acquisition[115] - The effective tax rate for Q2 2025 rose to 22.9% from 21.2% in Q2 2024, primarily due to a less favorable impact from discrete tax items compared to the prior year[116] Results of Reportable Business Segments Q2 2025 segment results show HST sales growth, FMT sales decline, FSDP sales growth, and varied Adjusted EBITDA margins - HST Segment: Q2 organic sales grew 4%, driven by price, growth initiatives, and aerospace/defense volumes, though offset by weakness in semiconductor and industrial businesses; Adjusted EBITDA margin fell to 26.0% due to the Mott acquisition and unfavorable mix[121] - FMT Segment: Q2 organic sales fell 2% due to lower volumes in chemical, water, energy, and agriculture, partially offset by price; Adjusted EBITDA margin improved to 35.0% from 33.7% due to positive price/cost and productivity[123] - FSDP Segment: Q2 organic sales grew 2%, driven by strong North America Fire OEM demand, partially offset by timing of Dispensing projects; Adjusted EBITDA margin increased to 29.4% from 29.0% due to positive price/cost[126][127] Liquidity and Capital Resources The company maintains strong liquidity with $568.2 million cash, despite decreased operating cash flow due to inventory increases Key Liquidity Metrics (June 30, 2025, in millions USD) | Metric | Value | | :--- | :--- | | Cash and cash equivalents | $568.2 | | Revolving Facility availability | $540.6 | | Working capital | $1,086.7 | - Operating working capital increased by $61.9 million since year-end 2024, primarily driven by a $58.1 million increase in inventories to support planned production[131] - Free cash flow for H1 2025 was $238.3 million, down from $254.3 million in H1 2024[137] - The company was in compliance with all debt covenants as of June 30, 2025, with a leverage ratio of 2.08 to 1 (maximum 3.50 to 1)[142] Quantitative and Qualitative Disclosures About Market Risk No material changes to market risks were reported since the last annual report - There have been no material changes with respect to market risks since the last annual report[155] Controls and Procedures Disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[157] - No material changes were made to the company's internal control over financial reporting during the second quarter of 2025[158] Part II. Other Information Legal Proceedings The company is involved in various legal proceedings, including asbestos-related lawsuits, not expected to have a material adverse effect - The company and its subsidiaries are defendants in numerous asbestos-related personal injury lawsuits[162] - The majority of settlement and legal costs for asbestos claims have been covered by insurance, and the company does not currently expect a material adverse effect from these proceedings[162] Risk Factors No material changes to risk factors were reported since the last annual report - No material changes to risk factors were reported since the last annual report[163] Unregistered Sales of Equity Securities and Use of Proceeds In Q2 2025, the company repurchased 268,586 shares for $186.16 per share, with $439.7 million remaining for future repurchases Share Repurchases for Q2 2025 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | — | $— | | May 2025 | 268,586 | $186.16 | | June 2025 | — | $— | | Total | 268,586 | $186.16 | - The approximate dollar value that may yet be purchased under the plans is $439.7 million as of the end of the quarter[164] Other Information The Board adopted amended bylaws effective July 28, 2025, and no Rule 10b5-1 trading plans were adopted or terminated - The company's Board adopted amended and restated bylaws effective July 28, 2025[165] - Key amendments enhance procedures for stockholder nominations and proposals and align with developments in Delaware law[168] - No directors or executive officers adopted or terminated Rule 10b5-1 trading plans during the quarter ended June 30, 2025[167] Exhibits This section lists exhibits filed with the Form 10-Q, including bylaws, CEO/CFO certifications, and iXBRL financial data - Filed exhibits include Amended and Restated Bylaws (3.1), CEO/CFO Certifications (31.1, 31.2, 32.1, 32.2), and iXBRL data files (101, 104)[169]