IDEX Aims to Improve Productivity to Counter Muted Growth
IDEX reported adjusted earnings of 89 cents per share for third-quarter 2015, which was in line with the Zacks Consensus Estimate, and increased 1.1% year over year. However, adjusted net income came in at $69.4 million, down 2.9% from the previous year, driven by feeble performance across the company's three operating segments.
Net sales stood at $503.8 million, down 5.5% year over year, and lagged the Zacks Consensus Estimate of $523 million. The decline in revenues was primarily due to weak organic growth, which was down 4%, and adverse foreign currency translation effect to the tune of 4%, partially offset by inorganic growth of 2%. Orders in the reported quarter stood at $485 million, down 4% from the year-ago quarter.
IDEX's revenues have been taking a hit from strength in the U.S. dollar as well as softness in energy prices, and we expect these factors to continue to be formidable headwinds for the company in the remaining part of the year as well. Also, a slumping North American industrial market adds to the unfavorable conditions for the industrial goods manufacturer.
However, the company is striving to counter the muted growth environment by focusing on improving productivity and conducting heavy restructuring across its portfolio in the remaining part of the year. IDEX expects to spend about $8 million to $10 million in aggregate on restructuring initiatives in 2015, which will generate significant savings in 2016. These steps are expected to boost the company's operational efficiency and lend strength to its bottom line in the coming quarters.
In addition, IDEX is striving to expand its businesses in the emerging markets and aims to increase its market exposure and improve sales mix by continually developing new products. With a flexible yet disciplined focus on cost and productivity, IDEX expects to successfully tap newer markets to augment its revenue. The company intends to optimize its cost structure, increase its competitiveness and reallocate resources to improve profitability.
IDEX currently has a Zacks Rank #3 (Hold). Other stocks that look promising and are worth a look now in the industry include Federal Signal Corp. FSS , carrying a Zacks Rank #2 (Buy), and GigOptix, Inc. GIG and Mistras Group, Inc. MG , both carrying a Zacks Rank #1 (Strong Buy).