Press release·02/21/2025 12:35:55

Overview

IDEX is an applied solutions provider specializing in the manufacturing of fluid and metering technologies, health and science technologies, and fire, safety and other diversified products built to customers’ specifications. IDEX’s products are sold in niche markets across a wide range of industries throughout the world. IDEX’s businesses are affected by levels of industrial activity and economic conditions in the U.S. and other countries where it does business, as well as by the relationship of the U.S. dollar to other currencies. Levels of capacity utilization and capital spending in certain markets and overall industrial activity are important factors that influence the demand for IDEX’s products.

2024 Highlights (All comparisons are against 2023 unless otherwise noted)

• Net sales of $3,268.8 million, flat overall and down 2% organically
• Diluted earnings per common share (EPS) attributable to IDEX of $6.64, down 15%
• Adjusted diluted EPS attributable to IDEX of $7.89, down 4%
• Operating cash flow of $668.1 million, down 7%, was 132% of net income, up from 120%
• Free cash flow of $603.0 million, down 4%, was 101% of adjusted net income, flat with prior year
• Completed acquisition of Mott Corporation and its subsidiaries for $986.2 million
• Completed a public offering of $500 million in 4.950% Senior Notes due 2029 to fund the Mott acquisition

During 2024, the Company delivered solid execution amid uncertain macro conditions and continued to deploy capital focused on growth initiatives, including the Mott acquisition. Net sales were flat overall, with growth in the FSDP segment offsetting declines in the HST segment. Despite market choppiness, the businesses achieved strong productivity through price capture and operational excellence, delivering reported and adjusted diluted EPS of $6.64 and $7.89, respectively.

2025 Outlook

Moving into 2025, the majority of IDEX’s end markets are stable. The businesses are well-positioned to capitalize on secular growth trends that are expected to emerge following the current period of near-term uncertainty surrounding U.S. trade and economic policy and geopolitical tension.

Within HST, growth is expected to be driven by demand for new disease therapies, nutrition, global communication satellite network expansion, and energy consumption tied to datacenters. FMT expects its largest area of growth to come from its water businesses, while FSDP growth will continue to be driven by the fire and safety businesses as North America original equipment manufacturers recover.

Results of Operations

Net sales were flat compared to the prior year, reflecting a 2% increase from acquisitions, net of divestitures, offset by a 2% decrease in organic net sales due to lower volumes, primarily in the HST segment. Gross profit and gross margin were positively impacted by strong price/cost but negatively impacted by higher employee-related costs and unfavorable mix. Selling, general and administrative expenses increased primarily due to the impact of acquisitions and higher employee-related costs.

The 2024 effective tax rate was 21.1% compared to 21.7% in 2023, with one-time discrete tax benefits lowering the rate in both years.

Results of Reportable Business Segments

Fluid & Metering Technologies (FMT) Segment:

• Organic net sales were positively impacted by price capture and growth initiatives, offset by lower volumes in agriculture and energy markets.
• Adjusted EBITDA margin decreased primarily due to higher employee-related costs, higher discretionary spending and unfavorable mix.

Health & Science Technologies (HST) Segment:

• Organic net sales were negatively impacted by cyclical market softness in life sciences and semiconductors, partially offset by price capture and growth initiatives.
• Adjusted EBITDA margin decreased primarily due to higher employee-related costs and unfavorable mix.

Fire & Safety/Diversified Products (FSDP) Segment:

• Organic net sales were positively impacted by strong growth initiatives, recovery in fire OEM markets, and price capture, partially offset by unfavorable mix.
• Adjusted EBITDA margin decreased primarily due to higher employee-related costs and unfavorable mix.

Liquidity and Capital Resources

The Company believes current cash, cash from operations and available credit will be sufficient to meet operating cash requirements, planned capital expenditures, debt service, pension funding, dividends and potential acquisitions for the foreseeable future.

Key liquidity metrics as of December 31, 2024 include:

• Working capital of $963.0 million
• Cash and cash equivalents of $620.8 million, with $462.7 million held outside the U.S.
• Revolving Facility availability of $527.4 million

Cash flows provided by operating activities decreased $48.6 million to $668.1 million in 2024, primarily due to lower earnings and timing of customer deposits and project deliveries. Free cash flow was $603.0 million, or 101% of adjusted net income.

The Company’s credit ratings from S&P, Moody’s and Fitch remained stable in 2024.

Critical Accounting Estimates

The Company’s critical accounting estimate is the assessment of goodwill and indefinite-lived intangible assets for impairment. This involves significant judgments and estimates related to forecasted operating results, cash flows, weighted average cost of capital, market multiples and terminal growth rates. Based on the annual impairment test, all reporting units and trade names had fair values substantially in excess of their carrying values.

Non-GAAP Disclosures

The Company provides reconciliations of various non-GAAP financial measures, including Organic net sales, Adjusted gross profit and margin, Adjusted net income and EPS, Consolidated Adjusted EBITDA and margin, and Free cash flow and conversion. Management uses these metrics to measure performance and provide additional insight for investors.