IDEX Reports Fourth Quarter and Full Year 2020 Results

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IDEX Corporation (NYSE: IEX) reported financial results for 2020, highlighting full-year EPS of $4.94 and adjusted EPS of $5.19. Cash from operations reached $569 million, marking an 8% increase, leading to a record free cash flow of $518 million. Orders in Q4 were $679 million, a 10% rise, while overall orders for the year totaled $2.4 billion, down 3%. The company announced the acquisition of Abel Pumps, L.P. in January 2021. Despite a strong performance in cash flow, sales decreased by 6% year-over-year, attributed to lower volume and a challenging business mix.

Positive

Full-year cash from operations increased 8% to $569 million.
Record full-year free cash flow of $518 million, up 9%.
Q4 orders increased 10%, totaling $679 million.

Negative

Full-year sales declined 6% year-over-year to $2.4 billion.
Gross margin decreased 140 basis points to 43.7%.
Net income fell 11% to $377.8 million.

02/03/2021 - 04:30 PM

IDEX Corporation (NYSE: IEX) today announced its financial results for the quarter and year ended December 31, 2020.

2020 Highlights

Full year EPS of $4.94; adjusted EPS of $5.19
Full year cash from operations of $569 million, up 8 percent, resulting in record full year free cash flow of $518 million, up 9 percent
Record fourth quarter orders of $679 million were up 10 percent overall and 7 percent organically
Fourth quarter EPS of $1.32; adjusted EPS of $1.37
Announced the acquisition of Abel Pumps, L.P. and certain of its affiliates in January 2021

Full Year 2020

Orders of $2.4 billion were down 3 percent compared with the prior year (-4 percent organic and +1 percent acquisition).

Sales of $2.4 billion were down 6 percent compared with the prior year (-9 percent organic and +3 percent acquisition).

Gross margin of 43.7 percent was down 140 basis points compared with the prior year as a result of lower volume and business mix, partially offset by price capture. Excluding a $4.1 million pre-tax fair value inventory step-up charge related to the Flow MD acquisition, adjusted gross margin of 43.9 percent was down 130 basis points compared with the adjusted prior year.

Operating income of $520.7 million resulted in an operating margin of 22.1 percent, down 110 basis points from the prior year primarily due to lower volume and business mix, partially offset by price capture and cost savings in the current year as well as higher asset impairments in the prior year. Excluding the $4.1 million pre-tax fair value inventory step-up charge and $11.8 million of restructuring expenses and asset impairments, adjusted operating income was $536.6 million with an adjusted operating margin of 22.8 percent, down 140 basis points from the adjusted prior year. Adjusted operating income drove adjusted EBITDA of $622.9 million which was 27 percent of sales and covered interest expense by almost 14 times.

Provision for income taxes of $92.6 million resulted in an effective tax rate (ETR) of 19.7 percent, which was lower than the prior year ETR of 20.2 percent primarily due to benefits associated with the finalization of the Global Intangible Low-Tax Income ("GILTI") regulations in the third quarter of 2020.

Net income was $377.8 million which resulted in EPS of $4.94, down 62 cents, or 11 percent, from the prior year EPS. Excluding the $3.2 million fair value inventory step-up charge, the $6.5 million loss on early debt redemption, and $9.1 million of restructuring expenses and asset impairments, all net of related tax benefits, adjusted EPS of $5.19 decreased 61 cents, or 11 percent, from the prior year adjusted EPS.

Cash from operations of $569.3 million was up 8 percent from the prior year and was 151 percent of net income primarily due to working capital improvements, partially offset by lower earnings. Cash from operations led to free cash flow of $517.7 million, which was up 9 percent from the prior year and was 131 percent of adjusted net income.

The Company repurchased 876 thousand shares of common stock for $110.3 million in 2020.

Fourth Quarter 2020

Orders of $678.6 million were up 10 percent compared with the prior year period (+7 percent organic, +1 percent acquisition and +2 percent foreign currency translation).

Sales of $614.8 million were up 2 percent compared with the prior year period (-1 percent organic, +1 percent acquisition and +2 percent foreign currency translation).

Gross margin of 43.8 percent was down 20 basis points compared with the prior year period primarily due to lower volume and business mix, partially offset by price capture.

Operating income of $139.0 million resulted in an operating margin of 22.6 percent, up 50 basis points compared to the prior year period due to price capture and cost savings, partially offset by lower volume and business mix. Excluding $5.0 million of restructuring expenses and asset impairments, adjusted operating income was $144.0 million with an adjusted operating margin of 23.4 percent, up 10 basis points compared to the adjusted prior year period. Adjusted operating income drove adjusted EBITDA of $167.2 million which was 27 percent of sales and covered interest expense by over 15 times.

Provision for income taxes of $28.8 million resulted in an ETR of 22.2 percent, which was higher than the prior year period ETR of 20.6 percent primarily due to the revaluation of foreign deferred income tax balances necessitated by changes in foreign tax rates.

Net income was $101.1 million which resulted in EPS of $1.32, up 6 cents, or 5 percent, from the prior year period EPS. Excluding restructuring expenses and asset impairments, adjusted EPS of $1.37 increased 4 cents, or 3 percent, from the prior year period adjusted EPS.

Cash from operations of $161.4 million was up 7 percent from the prior year period and was 160 percent of net income. Cash from operations led to free cash flow of $149.3 million, which was up 9 percent compared to the prior year period and was 142 percent of adjusted net income.

“I want to thank the entire IDEX team for their perseverance and performance throughout the pandemic in 2020. With our focus on workplace safety, business continuity, liquidity and playing offense opportunistically, we were able to deliver for our shareholders, customers and employees in 2020. I am honored to be the leader of this outstanding global organization.

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