IDEX Corporation (IEX Quick QuoteIEX - Free Report) reported impressive results for the fourth quarter of 2020 with earnings surpassing estimates by 3.8%. This was the fourth consecutive quarter of better-than-expected results. Also, the period’s sales beat the Zacks Consensus Estimate by 2.1%.

The company’s adjusted earnings in the reported quarter were $1.37 per share, surpassing the consensus estimate of $1.32. Also, the bottom line grew 3% from the year-ago figure of $1.33 on the back of sales growth and an improvement in the operating margin.

In 2020, the company’s adjusted earnings were $5.19, decreasing 10.5% from the previous year. However, the bottom line exceeded the consensus estimate of $5.15.

Revenue Details

In the quarter under review, IDEX’s net sales were $614.8 million, reflecting year-over-year growth of 1.5%. The top line benefited from a 1% gain from acquired assets and a 2% contribution from foreign currency translation, partially offset by a 1% decline in organic sales.

Also, the company’s revenues surpassed the Zacks Consensus Estimate of $602 million.

Orders in the quarter totaled $678.6 million, reflecting year-over-year growth of 10%. Organically, orders increased 7% while acquired assets and foreign currency translation positively impacted orders by 1% and 2%, respectively.

The company currently reports under three business segments, results of which are discussed below:

Revenues from Fluid & Metering Technologies totaled $229.6 million, increasing 0.9% year over year. Organic sales were down 4% while acquisitions and foreign currency translation added 3% and 2%, respectively.

Revenues from Health & Science Technologies totaled $235.9 million, reflecting year-over-year growth of 3.8%. Organic sales in the quarter inched up 2% year over year and foreign currency translation left a positive impact of 2%.

Revenues from Fire & Safety/Diversified Products totaled $150.6 million, declining 1% year over year. The results were adversely impacted by a 3% decline in organic sales, partially offset by a 2% gain from foreign currency translation.

In 2020, the company’s net sales were $2.35 billion, down 5.7% from the previous year. However, the top line surpassed the Zacks Consensus Estimate of $2.34 billion.

Margin Profile

In the quarter under review, IDEX’s cost of sales increased 1.9% year over year to $345.7 million. Adjusted gross profit was $269.2 million, up 0.9% year over year while adjusted gross margin decreased 20 basis points (bps) to 43.8%. The gross margin suffered unfavorable impacts of business mix and lower volumes, partially offset by pricing.

Selling, general and administrative expenses decreased 0.4% year over year to $125.2 million. It represented 20.4% of revenues. Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) in the quarter under review increased 4.8% year over year to $167.2 million. Also, adjusted EBITDA margin grew 90 bps year over year to 27.2%.

Adjusted operating income came in at $144 million, up 2% year over year while margin was at 23.4%, up 10 bps. Interest expenses in the quarter dipped 2.6% year over year to $10.8 million.

Balance Sheet and Cash Flow

Exiting the fourth quarter, IDEX’s cash and cash equivalents increased 16.9% sequentially to $1,025.9 million. Further, long-term debt of $1,044.4 million was flat on a sequential basis.

Notably, the company used $300 million for the redemption of 4.5% senior notes while it raised $499.1 million proceeds from the issuance of 3% senior notes in 2020.

IDEX generated net cash of $569.3 million from operating activities in 2020, increasing 7.8% from the previous year. Capital used for purchasing property, plant and equipment was $51.6 million, reflecting year-over-year growth of 1.2%. Free cash flow was $517.7 million, up 8.5% year over year.

The company paid out dividends totaling $151.8 million and repurchased shares worth $110.3 million in 2020, reflecting a year-over-year increase of 3.1% and 101.8%, respectively.

Acquisition

In January 2021, IDEX agreed to purchase Abel Pumps L.P. This buyout is predicted to boost its pump platform, which comes under the ambit of the Fluid & Metering Technologies segment.

Outlook

IDEX anticipates end-market conditions to improve in 2021. The company anticipates a 2-4% year-over-year improvement in organic sales in the first quarter of 2021 and a 6-8% in the full year.

Earnings are predicted to be $1.38-$1.42 in the first quarter and $5.65-$5.95 in 2021. The yearly projection is better than $5.19 recorded in 2020.