IDEX Corporation (IEX Quick QuoteIEX - Free Report) reported impressive third-quarter 2022 results. The company’s earnings surpassed the Zacks Consensus Estimate by 6.5%, whereas sales beat the same by 5.8%. Following this stellar performance, shares of IEX gained 2.5% in after-hours trading on Oct 25.

In the reported quarter, IDEX’s adjusted earnings were $2.14 per share, beating the Zacks Consensus Estimate of $2.01. On a year-over-year basis, the bottom line increased 31.3% from the year-ago quarter’s $1.63. Healthy segmental results favorably impacted the quarter’s earnings.

Earnings for the third quarter exceeded management’s projection of $1.98-$2.03.

Revenue Details

In the quarter under review, IDEX’s net sales were $824 million, reflecting year-over-year growth of 16%. Organic sales in the quarter increased 15% year over year, higher than 9-10% growth expected by IEX. Acquired assets boosted sales 3% and the exit of a COVID testing application had a 3% impact on sales. Foreign currency translation left a negative impact of 5%.

IDEX’s top line surpassed the Zacks Consensus Estimate of $779 million.

IEX reports net sales under three business segments, the results of which are discussed below:

Revenues from Fluid & Metering Technologies totaled $307.6 million, increasing 22% year over year. Organic sales were up 17% and synergies from acquired assets added 9%. Foreign currency translation left a negative impact of 4%.

Revenues from Health & Science Technologies totaled $345 million, reflecting year-over-year growth of 14%. Organic sales in the quarter increased 13% year over year, while the exit of a COVID testing application boosted sales 6%. Foreign currency translation left a negative impact of 5%.

Revenues from Fire & Safety/Diversified Products totaled $172.4 million, rising 8% year over year. The results were aided by a 14% increase in organic sales but suffered 6% forex woes.

Margin Profile

In the quarter under review, IDEX’s cost of sales increased 10.5% year over year to $442.2 million. The adjusted gross profit was $363.9 million, up 13.5% year over year, while the adjusted gross margin was 45.1% compared with 45% reported in the year-ago quarter.

Selling, general and administrative expenses increased 10% year over year to $161.9 million. The same represented 19.6% of revenues. Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) in the quarter under review increased 16% year over year to $231.4 million. The adjusted EBITDA margin increased 70 bps year over year to 28.7%.

The adjusted operating income was $201.1 million, up 16.2% year over year, whereas the margin was 24.9%, up 60 bps. Interest expenses in the quarter increased 1.1% year over year to $9.6 million.

Balance Sheet and Cash Flow

While exiting the third quarter, IDEX’s cash and cash equivalents decreased 20.4% to $680.7 million compared with $855.4 million recorded at the end of fourth-quarter 2021. Long-term borrowings were $1,191.1 million compared with $1,190.3 million recorded at the end of fourth-quarter 2021.

In the first nine months of 2022, IDEX generated net cash of $390.1 million from operating activities, decreasing 3% from the year-ago period. Capital used for purchasing property, plant and equipment was $48 million compared with $45.5 million in the first nine months of 2021. Free cash flow was $342.1 million, down 4.1% year over year.

IEX paid out dividends totaling $132.2 million and repurchased common stocks worth $146.3 million.

Amount spent on acquisitions, net of acquired cash, totaled $232.6 million.

Outlook

For fourth-quarter 2022, IDEX anticipates adjusted earnings of $1.92-$1.97 per share and 9% growth in organic sales from the respective year-ago readings.

IEX predicts EPS of $1.75-$1.80 per share for fourth-quarter 2022.

For 2022, IDEX anticipates adjusted earnings of $8.04-$8.09 per share, higher than the $7.88-$7.98 per share projected earlier. Full-year earnings are predicted to be $7.75-$7.80, higher than the $7.19-$7.29 per share expected earlier.

Organic sales are predicted to grow approximately 12% for 2022 compared with 10% expected earlier.

Zacks Rank & Stocks to Consider

IEX currently carries a Zacks Rank #3 (Hold).

Some better-ranked companies from the Industrial Products sector are discussed below:

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EPAC’s earnings estimates have increased 9.1% for fiscal 2023 (ending August 2023) in the past 60 days. The company’s shares have gained 27.1% in the past three months.

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In the past 60 days, iRobot’s earnings estimates have increased 0.1% for 2022. The stock has rallied 29.3% in the past three months.