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IDEX Corporation (IEX - Free Report) reported better-than-expected results for the first quarter of 2021. Its earnings surpassed estimates by 7.09% and sales beat the same by 2.47%. Notably, this was the company’s fifth consecutive quarter of impressive bottom-line results.
In addition to the impressive results, the company’s upwardly revised financial projections for 2021 and the deal to acquire Airtech Group, Inc. boosted investors’ sentiments for the stock. Its shares yesterday gained 0.33%, ending the trading session at $226.19.
The company’s adjusted earnings in the reported quarter were $1.51 per share, surpassing the consensus estimate of $1.41. Also, the bottom line grew 13.5% from the year-ago figure of $1.33 on the back of sales growth and an improvement in the operating margin.
Revenue Details
In the quarter under review, IDEX’s net sales were $652 million, reflecting year-over-year growth of 9.7%. The top line gained from contributions of 1% from acquired assets, 3% from foreign-currency translation and 6% from organic sales.
Also, the company’s revenues surpassed the Zacks Consensus Estimate of $636 million.
Orders in the quarter totaled $710.7 million, reflecting year-over-year growth of 10%. Organically, orders increased 6%, and acquired assets and foreign-currency translation positively impacted orders by 1% and 3%, respectively.
The company currently reports under three business segments, results of which are discussed below:
Revenues from Fluid & Metering Technologies totaled $243.4 million, increasing 7.3% year over year. Organic sales were up 2%, and acquisitions and foreign currency translation added 3% and 2%, respectively.
Revenues from Health & Science Technologies totaled $250.4 million, reflecting year-over-year growth of 11.7%. Organic sales in the quarter increased 9% year over year and foreign-currency translation left a positive impact of 3%.
Revenues from Fire & Safety/Diversified Products totaled $159.5 million, rising 10.5% year over year. The results were positively impacted by a 7% increase in organic sales and a 4% gain from foreign-currency translation.
Margin Profile
In the quarter under review, IDEX’s cost of sales increased 11.4% year over year to $359.4 million. Adjusted gross profit was $293.3 million, up 7.8% year over year, while adjusted gross margin decreased 70 basis points (bps) to 45%.
Selling, general and administrative expenses increased 2.1% year over year to $134.9 million. It represented 20.7% of revenues. Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) in the quarter under review increased 14.2% year over year to $180.8 million. Also, adjusted EBITDA margin grew 110 bps year over year to 27.7%.
Adjusted operating income was $158.4 million, up 13.2% year over year, whereas margin was at 24.3%, up 80 bps. Interest expenses in the quarter dipped 0.9% year over year to $10.8 million.
Balance Sheet and Cash Flow
Exiting the first quarter, IDEX’s cash and cash equivalents decreased 6.6% sequentially to $958.1 million. Further, long-term debt of $1,044.6 million was flat on a sequential basis.
In the quarter, IDEX generated net cash of $109.3 million from operating activities, increasing 29% from the prior-year quarter. Capital used for purchasing property, plant and equipment was $14.6 million versus $12.8 million in the first quarter of 2020. Free cash flow was $94.7 million, up 31.6% year over year.
In the quarter, the company paid out dividends totaling $38.2 million and refrained from repurchasing any shares. Notably, it distributed $38.7 million as dividends and bought back shares worth $108.9 million in the year-ago quarter.
Acquisitions
In the first quarter of 2021, IDEX used $106.2 million for acquiring businesses. This compares with $120.8 million spent in the year-ago quarter.
In March 2021, IDEX completed the acquisition of Abel Pumps L.P. as well as some of its affiliates for $106.2 million in cash. The buyout is predicted to boost its pump platform and is integrated with IDEX’s Fluid & Metering Technologies segment.
In addition, IDEX has agreed to purchase Rutherford, NJ-based Airtech Group, Inc. as well as US Valve Corporation and other entities. The other party to the transaction, valued at $470 million, was an investment fund handled by EagleTree Capital.
Notably, Airtech specializes in making compressor systems, vacuum pumps, valves and regenerative blowers. The products are widely used in transportation, food processing, packaging and alternative energy markets.
The acquisition is anticipated to be completed in second-quarter 2021 and will boost operations of IDEX’s Health & Science Technology segment.
Outlook
IDEX anticipates improvements in end-market conditions and, thus, has raised its projections for 2021. It now anticipates organic revenue growth of 9-10% for the year as compared with an increase of 6-8% mentioned earlier. Organic sales in the second quarter are expected to grow 18-20%.
Earnings are predicted to be $1.60-$1.63 for the second quarter and $6.05-$6.20 for 2021. The year’s projection reflects improvement from $5.65-$5.95 mentioned earlier.
IDEX Corporation Price, Consensus and EPS Surprise
In the past 60 days, earnings estimates for these companies improved for the current year. Further, earnings surprise for the last reported quarter was 46.34% for Helios Technologies, 28.95% for Applied Industrial and 143.14% for EnPro Industries.
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IDEX (IEX) Beats Q1 Earnings Estimates, Raises 2021 View
IDEX Corporation (IEX - Free Report) reported better-than-expected results for the first quarter of 2021. Its earnings surpassed estimates by 7.09% and sales beat the same by 2.47%. Notably, this was the company’s fifth consecutive quarter of impressive bottom-line results.
In addition to the impressive results, the company’s upwardly revised financial projections for 2021 and the deal to acquire Airtech Group, Inc. boosted investors’ sentiments for the stock. Its shares yesterday gained 0.33%, ending the trading session at $226.19.
The company’s adjusted earnings in the reported quarter were $1.51 per share, surpassing the consensus estimate of $1.41. Also, the bottom line grew 13.5% from the year-ago figure of $1.33 on the back of sales growth and an improvement in the operating margin.
Revenue Details
In the quarter under review, IDEX’s net sales were $652 million, reflecting year-over-year growth of 9.7%. The top line gained from contributions of 1% from acquired assets, 3% from foreign-currency translation and 6% from organic sales.
Also, the company’s revenues surpassed the Zacks Consensus Estimate of $636 million.
Orders in the quarter totaled $710.7 million, reflecting year-over-year growth of 10%. Organically, orders increased 6%, and acquired assets and foreign-currency translation positively impacted orders by 1% and 3%, respectively.
The company currently reports under three business segments, results of which are discussed below:
Revenues from Fluid & Metering Technologies totaled $243.4 million, increasing 7.3% year over year. Organic sales were up 2%, and acquisitions and foreign currency translation added 3% and 2%, respectively.
Revenues from Health & Science Technologies totaled $250.4 million, reflecting year-over-year growth of 11.7%. Organic sales in the quarter increased 9% year over year and foreign-currency translation left a positive impact of 3%.
Revenues from Fire & Safety/Diversified Products totaled $159.5 million, rising 10.5% year over year. The results were positively impacted by a 7% increase in organic sales and a 4% gain from foreign-currency translation.
Margin Profile
In the quarter under review, IDEX’s cost of sales increased 11.4% year over year to $359.4 million. Adjusted gross profit was $293.3 million, up 7.8% year over year, while adjusted gross margin decreased 70 basis points (bps) to 45%.
Selling, general and administrative expenses increased 2.1% year over year to $134.9 million. It represented 20.7% of revenues. Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) in the quarter under review increased 14.2% year over year to $180.8 million. Also, adjusted EBITDA margin grew 110 bps year over year to 27.7%.
Adjusted operating income was $158.4 million, up 13.2% year over year, whereas margin was at 24.3%, up 80 bps. Interest expenses in the quarter dipped 0.9% year over year to $10.8 million.
Balance Sheet and Cash Flow
Exiting the first quarter, IDEX’s cash and cash equivalents decreased 6.6% sequentially to $958.1 million. Further, long-term debt of $1,044.6 million was flat on a sequential basis.
In the quarter, IDEX generated net cash of $109.3 million from operating activities, increasing 29% from the prior-year quarter. Capital used for purchasing property, plant and equipment was $14.6 million versus $12.8 million in the first quarter of 2020. Free cash flow was $94.7 million, up 31.6% year over year.
In the quarter, the company paid out dividends totaling $38.2 million and refrained from repurchasing any shares. Notably, it distributed $38.7 million as dividends and bought back shares worth $108.9 million in the year-ago quarter.
Acquisitions
In the first quarter of 2021, IDEX used $106.2 million for acquiring businesses. This compares with $120.8 million spent in the year-ago quarter.
In March 2021, IDEX completed the acquisition of Abel Pumps L.P. as well as some of its affiliates for $106.2 million in cash. The buyout is predicted to boost its pump platform and is integrated with IDEX’s Fluid & Metering Technologies segment.
In addition, IDEX has agreed to purchase Rutherford, NJ-based Airtech Group, Inc. as well as US Valve Corporation and other entities. The other party to the transaction, valued at $470 million, was an investment fund handled by EagleTree Capital.
Notably, Airtech specializes in making compressor systems, vacuum pumps, valves and regenerative blowers. The products are widely used in transportation, food processing, packaging and alternative energy markets.
The acquisition is anticipated to be completed in second-quarter 2021 and will boost operations of IDEX’s Health & Science Technology segment.
Outlook
IDEX anticipates improvements in end-market conditions and, thus, has raised its projections for 2021. It now anticipates organic revenue growth of 9-10% for the year as compared with an increase of 6-8% mentioned earlier. Organic sales in the second quarter are expected to grow 18-20%.
Earnings are predicted to be $1.60-$1.63 for the second quarter and $6.05-$6.20 for 2021. The year’s projection reflects improvement from $5.65-$5.95 mentioned earlier.
IDEX Corporation Price, Consensus and EPS Surprise
IDEX Corporation price-consensus-eps-surprise-chart | IDEX Corporation Quote
Zacks Rank & Stocks to Consider
With a market capitalization of $17.1 billion, the company currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the industry are Helios Technologies, Inc. (HLIO - Free Report) , Applied Industrial Technologies, Inc. (AIT - Free Report) and EnPro Industries, Inc. (NPO - Free Report) . While Helios Technologies currently sports a Zacks Rank #1 (Strong Buy), both Applied Industrial and EnPro Industries carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, earnings estimates for these companies improved for the current year. Further, earnings surprise for the last reported quarter was 46.34% for Helios Technologies, 28.95% for Applied Industrial and 143.14% for EnPro Industries.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
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