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IDEX Corporation (IEX - Free Report) reported better-than-expected results for first-quarter 2020, with earnings and sales surpassing estimates by 3.10% and 0.08%, respectively.
The company’s adjusted earnings per share were $1.33, beating the Zacks Consensus Estimate of $1.29. However, the bottom line decreased 7.6% from the year-ago quarter’s $1.44 per share.
Organic Sales Decline Y/Y
IDEX generated revenues of $594.5 million in the quarter, down 4.5% from the year-ago quarter. Acquisitions had a positive impact of 2% on sales, while organic sales declined 5% and forex woes affected results by 1% in the quarter.
In addition, the company’s revenues managed to beat the Zacks Consensus Estimate of $594 million.
In the reported quarter, orders declined 2% year over year to $644.9 million. As noted, orders were down 2% organically. Forex woes hurt orders by 1%, while acquisition boosted the same by 1%.
IDEX reports revenues under the segments discussed below:
Fluid & Metering Technologies’ (“FMT”) net sales were $226.9 million, down 6% year over year. Organic net sales declined 5%, while forex headwinds had a 1% impact.
Revenues from Health & Science Technologies (“HST”) totaled $224.1 million, reflecting a year-over-year decline of 1%. Results reflected 4% organic sales decline, 4% gain from acquisitions and 1% adverse impact from forex woes.
Fire & Safety/Diversified Products’ (“FSDP”) revenues were $144.3 million, down 8% from the year-ago quarter. Organic sales decreased 7% and currency translation had an adverse 1% impact.
IDEX Corporation Price, Consensus and EPS Surprise
In the reported quarter, IDEX’s cost of sales dipped 4.7% year over year to $322.5 million. It represented 54.2% of the quarter’s revenues compared with 54.4% in the year-ago quarter. Gross margin improved 20 basis points (bps) year over year to 45.8%. Selling, general and administrative expenses declined 3% to $132 million. It represented 22.2% of revenues compared with 21.9% in the year-ago quarter.
Operating income in the quarter dipped 5.3% year over year to $139.9 million, with margin down 30 bps to 23.5%. On a segmental basis, operating income for FMT declined 7.1% to $66.8 million, that for HST dipped 3% to $52.6 million, and for FSDP it moved down 5.7% to $38 million. Effective tax rate in the reported quarter was 20%.
Balance Sheet and Cash Flow
Exiting the first quarter, IDEX had cash and cash equivalents of $569.2 million, down 10% from $632.6 million recorded at the end of 2019. Long-term borrowings were relatively flat at $999 million compared with $848.9 million as of Dec 31, 2019.
In the first three months of 2020, the company generated $84.8 million of net cash from operating activities, reflecting a decline of 4.4% from the year-ago comparable period. Capital spending on the purchase of property, plant and equipment was $12.8 million, roughly flat year over year. Free cash flow in the quarter declined 5% to $72 million.
In the first quarter of 2020, the company bought back 867,000 shares worth $108.9 million and distributed dividends totaling $38.7 million.
Notable Developments
In February 2020, IDEX completed the acquisition of Phoenix, AZ-based Flow Management Devices, LLC. The transaction value was $125 million. IDEX will benefit from the integration of Flow Management to its energy group, especially boosting the latter’s pump and metering systems business.
Outlook
On account of the coronavirus-led issues, IDEX anticipates a sales decline of 15-25% for the second quarter of 2020.
It is worth noting that on uncertainties, regarding the duration and impacts of the coronavirus outbreak on financial and operating results, the company has now withdrawn its prior-issued guidance for 2020.
Tennant delivered a positive earnings surprise of 26.60%, on average, in the trailing four quarters.
Broadwind delivered a positive earnings surprise of 10.42%, on average, in the trailing four quarters.
Acco Brands delivered a positive earnings surprise of 19.04%, on average, in the trailing four quarters.
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Image: Bigstock
IDEX (IEX) Q1 Earnings & Revenues Beat Estimates, Decline Y/Y
IDEX Corporation (IEX - Free Report) reported better-than-expected results for first-quarter 2020, with earnings and sales surpassing estimates by 3.10% and 0.08%, respectively.
The company’s adjusted earnings per share were $1.33, beating the Zacks Consensus Estimate of $1.29. However, the bottom line decreased 7.6% from the year-ago quarter’s $1.44 per share.
Organic Sales Decline Y/Y
IDEX generated revenues of $594.5 million in the quarter, down 4.5% from the year-ago quarter. Acquisitions had a positive impact of 2% on sales, while organic sales declined 5% and forex woes affected results by 1% in the quarter.
In addition, the company’s revenues managed to beat the Zacks Consensus Estimate of $594 million.
In the reported quarter, orders declined 2% year over year to $644.9 million. As noted, orders were down 2% organically. Forex woes hurt orders by 1%, while acquisition boosted the same by 1%.
IDEX reports revenues under the segments discussed below:
Fluid & Metering Technologies’ (“FMT”) net sales were $226.9 million, down 6% year over year. Organic net sales declined 5%, while forex headwinds had a 1% impact.
Revenues from Health & Science Technologies (“HST”) totaled $224.1 million, reflecting a year-over-year decline of 1%. Results reflected 4% organic sales decline, 4% gain from acquisitions and 1% adverse impact from forex woes.
Fire & Safety/Diversified Products’ (“FSDP”) revenues were $144.3 million, down 8% from the year-ago quarter. Organic sales decreased 7% and currency translation had an adverse 1% impact.
IDEX Corporation Price, Consensus and EPS Surprise
IDEX Corporation price-consensus-eps-surprise-chart | IDEX Corporation Quote
Margins Improve Y/Y
In the reported quarter, IDEX’s cost of sales dipped 4.7% year over year to $322.5 million. It represented 54.2% of the quarter’s revenues compared with 54.4% in the year-ago quarter. Gross margin improved 20 basis points (bps) year over year to 45.8%. Selling, general and administrative expenses declined 3% to $132 million. It represented 22.2% of revenues compared with 21.9% in the year-ago quarter.
Operating income in the quarter dipped 5.3% year over year to $139.9 million, with margin down 30 bps to 23.5%. On a segmental basis, operating income for FMT declined 7.1% to $66.8 million, that for HST dipped 3% to $52.6 million, and for FSDP it moved down 5.7% to $38 million. Effective tax rate in the reported quarter was 20%.
Balance Sheet and Cash Flow
Exiting the first quarter, IDEX had cash and cash equivalents of $569.2 million, down 10% from $632.6 million recorded at the end of 2019. Long-term borrowings were relatively flat at $999 million compared with $848.9 million as of Dec 31, 2019.
In the first three months of 2020, the company generated $84.8 million of net cash from operating activities, reflecting a decline of 4.4% from the year-ago comparable period. Capital spending on the purchase of property, plant and equipment was $12.8 million, roughly flat year over year. Free cash flow in the quarter declined 5% to $72 million.
In the first quarter of 2020, the company bought back 867,000 shares worth $108.9 million and distributed dividends totaling $38.7 million.
Notable Developments
In February 2020, IDEX completed the acquisition of Phoenix, AZ-based Flow Management Devices, LLC. The transaction value was $125 million. IDEX will benefit from the integration of Flow Management to its energy group, especially boosting the latter’s pump and metering systems business.
Outlook
On account of the coronavirus-led issues, IDEX anticipates a sales decline of 15-25% for the second quarter of 2020.
It is worth noting that on uncertainties, regarding the duration and impacts of the coronavirus outbreak on financial and operating results, the company has now withdrawn its prior-issued guidance for 2020.
Zacks Rank & Stocks to Consider
IDEX currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the Zacks Industrial Products sector are Tennant Company (TNC - Free Report) , Broadwind Energy, Inc. (BWEN - Free Report) and Acco Brands Corporation (ACCO - Free Report) . While Tennant currently sports a Zacks Rank #1 (Strong Buy), Broadwind and Acco Brands carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Tennant delivered a positive earnings surprise of 26.60%, on average, in the trailing four quarters.
Broadwind delivered a positive earnings surprise of 10.42%, on average, in the trailing four quarters.
Acco Brands delivered a positive earnings surprise of 19.04%, on average, in the trailing four quarters.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>