IDEX Corporation (IEX - Free Report) reported lackluster fourth-quarter 2019 results, with earnings and sales missing estimates by 1.48% and 1.46%, respectively.
The company’s adjusted earnings per share were $1.33, lagging the Zacks Consensus Estimate of $1.35. The bottom line excluded 9 cents per share of restructuring expenses and 2 cents of related tax benefits. However, the bottom line increased 1.5% from the year-ago quarter’s $1.31.
In 2019, adjusted earnings were $5.80 per share, reflecting an increase of 7.2% from last year’s figure of $5.41.
IDEX Corporation Price, Consensus and EPS Surprise
Organic Sales Decline Y/Y
IDEX generated revenues of $606 million in the quarter, down 1.3% from the year-ago quarter. Acquisitions had a positive impact of 2% on sales while forex woes affected results by 1%. Organic sales in the quarter declined 2% due to weakening global demand for industrial products along with prevailing uncertainties related to the soft global economy.
In addition, the company’s revenues lagged the Zacks Consensus Estimate of $615 million.
In the reported quarter, orders jumped 1% year over year to $616.6 million. As noted, orders were flat organically. Forex woes hurt orders by 1%, while acquisition boosted the same by 2%.
IDEX reports revenues under the segments discussed below:
Fluid & Metering Technologies’ (“FMT”) net sales were $227.5 million, down 4.1% year over year. Organic net sales declined 3%, while forex headwinds had a 1% impact.
Revenues from Health & Science Technologies (“HST”) totaled $227.3 million, reflecting year-over-year growth of 0.8%. Results reflected 3% organic sales decline and 4% gain from acquisitions.
Fire & Safety/Diversified Products’ (“FSDP”) revenues were $152 million, up 0.2% from the year-ago quarter. Organic sales increased 1% and currency translation had an adverse 1% impact.
In 2019, the company’s revenues were $2,494.6 million, roughly flat year over year. Organic sales increased 1% and acquisitions had a positive impact of 1%, partially offset by 2% adverse impact of foreign currency movements.
Margins Improve Y/Y
In the reported quarter, IDEX’s cost of sales dipped 0.4% year over year to $339.1 million. It represented 56% of the quarter’s revenues compared with 55.4% in the year-ago quarter. Adjusted gross margin improved 20 basis points (bps) year over year to 45.2%. Selling, general and administrative expenses declined 3.5% to $125.8 million. It represented 20.8% of revenues compared with 21.2% in the year-ago quarter.
Adjusted operating income in the quarter dipped 1.5% year over year to $141.1 million with margin remaining flat at 23.3%. On a segmental basis, adjusted operating income for FMT declined 7.7% to $63.7 million and that for HST dipped 1.8% to $51.8 million, while for FSDP it declined 1% to $39.8 million. Effective tax rate in the reported quarter was 20.6%.
Balance Sheet and Cash Flow
Exiting the fourth quarter, IDEX had cash and cash equivalents of $632.6 million, up 35.6% from $466.4 million recorded at the end of 2018. Long-term borrowings were relatively flat at $848.9 million compared with $848.3 million a year ago.
In 2019, the company generated $528.1 million of net cash from operating activities, reflecting growth of 10.2% from 2018. Capital spending on the purchase of property, plant and equipment was roughly $50.9 million, down 9.2% year over year. Free cash flow in the quarter declined 0.2% to $137 million.
In 2019, the company bought back 389,000 shares worth $54.7 million and distributed dividends totaling $147.2 million.
Outlook
For 2020, IDEX anticipates growth investments and solid restructuring actions amid challenging industrial markets (mainly in the first half of the year). Restructuring initiatives will provide $15 million savings in 2020.
Adjusted earnings for the year are anticipated to be $5.55-$5.85. First-quarter earnings are estimated to be $1.30-$1.34. Organic revenue growth is anticipated to be flat to roughly 2% lower for the full year, with 4-5% fall in the first quarter of 2020.
In addition, M&A remains a key priority as the company recently announced an agreement to acquire Phoenix, AZ-based Flow Management Devices, LLC (Flow MD) for a cash consideration of $125 million. Subject to customary closing conditions and regulatory approvals, the contract will be effective first-quarter end.
Zacks Rank & Stocks to Consider
IDEX currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the industry are DXP Enterprises, Inc. (DXPE - Free Report) , Tennant Company (TNC - Free Report) and Barnes Group Inc. (B - Free Report) . While DXP Enterprises sports a Zacks Rank #1 (Strong Buy), Tennant and Barnes carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
DXP Enterprises surpassed earnings estimates thrice in the trailing four quarters, the positive surprise being 17.7%, on average.
Tennant surpassed earnings estimates in each of the trailing four quarters, the positive surprise being 28.7%, on average.
Barnes surpassed earnings estimates thrice in the trailing four quarters, the positive surprise being 4.2%, on average.
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IDEX Corporation (IEX - Free Report) reported lackluster fourth-quarter 2019 results, with earnings and sales missing estimates by 1.48% and 1.46%, respectively.
The company’s adjusted earnings per share were $1.33, lagging the Zacks Consensus Estimate of $1.35. The bottom line excluded 9 cents per share of restructuring expenses and 2 cents of related tax benefits. However, the bottom line increased 1.5% from the year-ago quarter’s $1.31.
In 2019, adjusted earnings were $5.80 per share, reflecting an increase of 7.2% from last year’s figure of $5.41.
IDEX Corporation Price, Consensus and EPS Surprise
Organic Sales Decline Y/Y
IDEX generated revenues of $606 million in the quarter, down 1.3% from the year-ago quarter. Acquisitions had a positive impact of 2% on sales while forex woes affected results by 1%. Organic sales in the quarter declined 2% due to weakening global demand for industrial products along with prevailing uncertainties related to the soft global economy.
In addition, the company’s revenues lagged the Zacks Consensus Estimate of $615 million.
In the reported quarter, orders jumped 1% year over year to $616.6 million. As noted, orders were flat organically. Forex woes hurt orders by 1%, while acquisition boosted the same by 2%.
IDEX reports revenues under the segments discussed below:
Fluid & Metering Technologies’ (“FMT”) net sales were $227.5 million, down 4.1% year over year. Organic net sales declined 3%, while forex headwinds had a 1% impact.
Revenues from Health & Science Technologies (“HST”) totaled $227.3 million, reflecting year-over-year growth of 0.8%. Results reflected 3% organic sales decline and 4% gain from acquisitions.
Fire & Safety/Diversified Products’ (“FSDP”) revenues were $152 million, up 0.2% from the year-ago quarter. Organic sales increased 1% and currency translation had an adverse 1% impact.
In 2019, the company’s revenues were $2,494.6 million, roughly flat year over year. Organic sales increased 1% and acquisitions had a positive impact of 1%, partially offset by 2% adverse impact of foreign currency movements.
Margins Improve Y/Y
In the reported quarter, IDEX’s cost of sales dipped 0.4% year over year to $339.1 million. It represented 56% of the quarter’s revenues compared with 55.4% in the year-ago quarter. Adjusted gross margin improved 20 basis points (bps) year over year to 45.2%. Selling, general and administrative expenses declined 3.5% to $125.8 million. It represented 20.8% of revenues compared with 21.2% in the year-ago quarter.
Adjusted operating income in the quarter dipped 1.5% year over year to $141.1 million with margin remaining flat at 23.3%. On a segmental basis, adjusted operating income for FMT declined 7.7% to $63.7 million and that for HST dipped 1.8% to $51.8 million, while for FSDP it declined 1% to $39.8 million. Effective tax rate in the reported quarter was 20.6%.
Balance Sheet and Cash Flow
Exiting the fourth quarter, IDEX had cash and cash equivalents of $632.6 million, up 35.6% from $466.4 million recorded at the end of 2018. Long-term borrowings were relatively flat at $848.9 million compared with $848.3 million a year ago.
In 2019, the company generated $528.1 million of net cash from operating activities, reflecting growth of 10.2% from 2018. Capital spending on the purchase of property, plant and equipment was roughly $50.9 million, down 9.2% year over year. Free cash flow in the quarter declined 0.2% to $137 million.
In 2019, the company bought back 389,000 shares worth $54.7 million and distributed dividends totaling $147.2 million.
Outlook
For 2020, IDEX anticipates growth investments and solid restructuring actions amid challenging industrial markets (mainly in the first half of the year). Restructuring initiatives will provide $15 million savings in 2020.
Adjusted earnings for the year are anticipated to be $5.55-$5.85. First-quarter earnings are estimated to be $1.30-$1.34. Organic revenue growth is anticipated to be flat to roughly 2% lower for the full year, with 4-5% fall in the first quarter of 2020.
In addition, M&A remains a key priority as the company recently announced an agreement to acquire Phoenix, AZ-based Flow Management Devices, LLC (Flow MD) for a cash consideration of $125 million. Subject to customary closing conditions and regulatory approvals, the contract will be effective first-quarter end.
Zacks Rank & Stocks to Consider
IDEX currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the industry are DXP Enterprises, Inc. (DXPE - Free Report) , Tennant Company (TNC - Free Report) and Barnes Group Inc. (B - Free Report) . While DXP Enterprises sports a Zacks Rank #1 (Strong Buy), Tennant and Barnes carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
DXP Enterprises surpassed earnings estimates thrice in the trailing four quarters, the positive surprise being 17.7%, on average.
Tennant surpassed earnings estimates in each of the trailing four quarters, the positive surprise being 28.7%, on average.
Barnes surpassed earnings estimates thrice in the trailing four quarters, the positive surprise being 4.2%, on average.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>
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.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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