IDEX Beats Comfortably on Q1 Earnings - Analyst Blog

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Industrial goods manufacturer IDEX Corporation ( IEX ) reported strong first quarter 2014 results with a healthy year-over-year increase in revenues and earnings through focused business-line strategies. Net income for the reported quarter was $74.5 million or 91 cents per share versus $61.3 million or 74 cents per share in the year-ago quarter. The year-over-year improvement in earnings was primarily driven by a solid increase in revenues. The reported earnings were well ahead of the Zacks Consensus Estimate of 84 cents.

Revenues

Net sales in the reported quarter improved to $544.0 million from $494.4 million in the prior-year period. Quarterly revenues also exceeded the Zacks Consensus Estimate of $526 million. Orders stood at $536 million, up 4% year over year. Organic growth contributed 8% and 3% to quarterly sales and orders, respectively.

By segments, Fluid and Metering Technologies (FMT) reported sales of $223 million in the quarter, up 6% year over year. The Health and Science Technologies (HST) segment revenues came in at $186 million in the reported quarter, improving 8% year over year, while the Fire and Safety/Diversified Products segment recorded sales of $137 million, up 23% year over year.

Margins

Operating income for the quarter was up 20% year over year to $114 million. Operating margin improved 170 basis points to 20.9%, driven by an increase in productivity and volume leverage. Earnings before Interest, Taxes Depreciation and Amortization (EBITDA) stood at $134 million in the reported quarter, up 16% from the year-ago period.

The FMT segment recorded an operating margin of 25.3% in the reported quarter, up 260 basis points year over year. Margins benefited from higher volume and productivity initiatives.

The HST segment's operating margin came in at 19.4%, up 70 basis points from the year-ago quarter driven by higher volume and productivity initiatives.

The Fire and Safety segment recorded an operating margin of 28.9%, up 360 basis points from the year-ago quarter. The year-over-year increase was primarily attributable to volume leverage from the fulfillment of the large Dispensing order received in the third quarter of 2013.

Balance Sheet and Cash Flow

As of Mar 31, 2014, IDEX Corporation had cash and cash equivalents of $458.4 million, while long-term debt stood at $778.9 million.

Cash flow from operating activities for the quarter aggregated $74.2 million compared with $72.2 million in the previous year. Free cash flow stood at $66.3 million at quarter end versus $67.0 million at the end of the year-ago period.

IDEX Corporation repurchased 551,000 shares for $40 million during the quarter. At the same time, the company announced a 21.7% year-over-year hike in its dividend payout to 28 cents or $1.12 per share on an annualized basis. The increased cash dividend is payable on Apr 30 to shareholders of record as of Apr 21. The dividend marks the 78th consecutive quarterly cash dividend payment by the company. A steady dividend payout is part of the long-term strategy of IDEX Corporation to provide attractive risk-adjusted returns to its stockholders. In addition, decent dividend increases at periodic intervals have been one of the company's most attractive features.

Outlook

IDEX Corporation remains bullish about its top- and bottom-line growth. The company expects North American markets to remain positive supported by continued stability in Europe and tempered by uneven growth in Asia. Despite the mixed growth expectations, second quarter 2014 earnings are expected in the range of 85 to 87 cents per share. For full year 2014, the company increased its earnings guidance to the range of $3.38 to $3.45 from the earlier projections of $3.33 to $3.43.

IDEX Corporation continues to drive organic growth while pursuing strategic acquisitions, increasing dividends and remaining active on share repurchases. Overall, we are encouraged by the company's positive outlook.

IDEX Corporation currently has a Zacks Rank #2 (Buy). Other stocks that are worth a look in the industry include Colfax Corporation ( CFX ), Dover Corporation ( DOV ) and Flowserve Corp. ( FLS ), each carrying a comparable Zacks Rank #2 (Buy).



COLFAX CORP (CFX): Free Stock Analysis Report

DOVER CORP (DOV): Free Stock Analysis Report

FLOWSERVE CORP (FLS): Free Stock Analysis Report

IDEX CORP (IEX): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: HST , CFX , DOV , FLS , IEX

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