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8-K - FORM 8-K - IDEX CORP /DE/ | c62788e8vk.htm |
EXHIBIT 99.1
IDEX CORPORATION REPORTS FOURTH QUARTER 2010 RESULTS;
ADJUSTED EARNINGS PER SHARE OF 54 CENTS
ADJUSTED EARNINGS PER SHARE OF 54 CENTS
LAKE FOREST, IL, February 2 IDEX Corporation (NYSE: IEX) today announced its financial results
for the three- and twelve-month periods ended December 31, 2010.
Q4 2010
New orders in the quarter totaled $409 million, up 17 percent compared to the prior year period.
Sales in the quarter totaled $405 million, 18 percent higher than the prior year period. For the
quarter on an organic basis, both orders and sales were 14 percent higher than the prior year
period.
Fourth quarter 2010 operating income, adjusted for nearly $5 million of restructuring related
charges, was $71 million and resulted in adjusted operating margin of 17.4 percent, up 100 basis
points from the prior year (excluding prior year restructuring related charges) due to volume and
improved productivity. Adjusted and reported fourth quarter operating income includes
approximately $2 million of acquisition related costs.
Excluding the impact from restructuring related charges, fourth quarter adjusted diluted earnings
per share was 54 cents, an increase of 10 cents, or 23 percent, from the fourth quarter of the
previous year (excluding prior year restructuring related charges).
Full Year 2010 Highlights
| Orders increased 15 percent compared to the prior year (+13 percent organic, +3 percent acquisition and -1 percent for foreign currency translation). | |
| Sales increased 14 percent compared to the prior year (+12 percent organic, +3 percent acquisition and -1 percent for foreign currency translation). | |
| Reported net income of $157 million was $44 million, or 39 percent, higher than the prior year. Excluding restructuring related charges, adjusted net income of $165 million was $43 million, or 36 percent, higher than the prior year (excluding prior year restructuring charges). | |
| Diluted EPS of $1.90 was 50 cents, or 36 percent, higher than the prior year. Excluding restructuring related charges, adjusted diluted EPS of $1.99 was 49 cents, or 33 percent higher than the prior year (excluding prior year restructuring charges). | |
| EBITDA of $306 million was 20 percent of sales and covered interest expense by more than 18 times. | |
| Adjusted free cash flow of $187 million (adjusted for $31 million forward starting interest rate swap settlement in Q4) represents 119% of net income. |
2010 was a record year for the company representing a full recovery from the recession. Organic
sales growth of 12 percent was broad based. Acquisitively, we added three highly strategic
businesses that fit very well within our Fluid & Metering and Health & Science portfolios. Our
growth in 2010 resulted in a strong bottom line and our balance sheet is extremely healthy.
Adjusted diluted 2010 EPS of $1.99 was 33 percent higher than 2009 and adjusted operating margin of
17.2 percent was 240 basis points higher than the prior year.
For 2011, we expect continued strong performance. Our Health & Science segment is expected to grow
organically in the high single digit to low double digit range, and our Fluid & Metering and Fire &
Safety segments are projected to grow in the mid to high single digit range. We will continue to
expand operating margin while reinvesting in the company to take advantage of global growth
opportunities. In addition, our strong cash flow generation and healthy balance sheet will
facilitate robust acquisition activity in 2011.
Based on our current outlook, for the full year 2011, were forecasting fully diluted EPS of $2.23
to $2.33 or up 12-17 percent versus 2010. Our projected first quarter 2011 EPS is in the range of
52 to 54 cents on a fully diluted basis.
Lawrence D. Kingsley
Chairman and Chief Executive Officer
Chairman and Chief Executive Officer
Fourth Quarter 2010 Business Highlights (excluding restructuring related charges)
Fluid & Metering Technologies
| Sales in the fourth quarter of $206 million reflected a 21 percent increase compared to the fourth quarter of 2009 (+18 percent organic, +5 percent acquisition, and -2 percent for foreign currency translation). | ||
| Operating margin of 18.9 percent represented a 100 basis point improvement compared with the fourth quarter of 2009 primarily due to higher volume. Excluding impact from acquisitions, fourth quarter adjusted operating margin was 19.4 percent, a 150 basis point improvement compared with the prior year. |
Health & Science Technologies
| Sales in the fourth quarter of $105 million reflected a 31 percent increase compared to the fourth quarter of 2009 (+18 percent organic, +14 percent acquisitions, and -1 percent for foreign currency translation). | ||
| Operating margin of 22.5 percent represented a 30 basis point improvement compared with the fourth quarter of 2009 primarily due to higher volume. |
Dispensing Equipment
| Sales in the fourth quarter of $24 million reflected a 4 percent increase compared to the fourth quarter of 2009 (+8 percent organic and -4 percent for foreign currency translation). | ||
| Operating margin of 3.9 percent was lower than the fourth quarter of 2009 primarily due to unfavorable product mix. |
Fire & Safety/Diversified Products
| Sales in the fourth quarter of $71 million reflected a 1 percent increase compared to the fourth quarter of 2009 (+4 percent organic and -3 percent for foreign currency translation). | ||
| Operating margin of 26.6 percent represented a 110 basis point improvement compared with the fourth quarter of 2009 primarily due to volume and favorable mix. |
For the fourth quarter of 2010, Fluid & Metering Technologies contributed 51 percent of sales and
48 percent of operating income; Health & Science Technologies accounted for 26 percent of sales and
27 percent of operating income; Dispensing Equipment accounted for 6 percent of sales and 1 percent
of operating income; and Fire & Safety/Diversified Products represented 17 percent of sales and 24
percent of operating income.
IDEX closes on Advanced Thin Films, LLC
On January 20, 2011 IDEX announced a definitive agreement to acquire Advanced Thin Films, LLC (AT
Films). As planned, IDEX closed on this transaction on January 31, 2011. AT Films will operate
within IDEXs Health and Science Technologies segment as a part of the IDEX optical products
platform.
Conference Call to be Broadcast over the Internet
IDEX will broadcast its fourth quarter earnings conference call over the Internet on Thursday,
February 3, 2010 at 9:30 a.m. CT. Chairman and Chief Executive Officer Larry Kingsley and Vice
President and Chief Financial Officer Dominic Romeo will discuss the companys recent financial
performance and respond to questions from the financial analyst community. IDEX invites interested
investors to listen to the call and view the accompanying slide presentation, which will be carried
live on its website at www.idexcorp.com. Those who wish to participate should log on several
minutes before the discussion begins. After clicking on the presentation icon, investors should
follow the instructions to ensure their systems are set up to hear the event and view the
presentation slides, or download the correct applications at no charge. Investors will also be able
to hear a replay of the call by dialing 800.642.1687 (or 706.645.9291 for international
participants) using the ID # 35655677.
A Note on EBITDA and Free Cash Flow
EBITDA means earnings before interest, income taxes, depreciation and amortization, while free cash
flow means cash flow from operating activities less capital expenditures plus the excess tax
benefit from stock-based compensation. Management uses these non-GAAP financial measures as
internal operating metrics and for enterprise valuation purposes. Management believes these
measures are useful as analytical indicators of leverage capacity and debt servicing ability, and
uses them to measure financial performance as well as for planning purposes. However, they should
not be considered as alternatives to net income, cash flow from operating activities or any other
items calculated in accordance with U.S. GAAP, or as an indicator of operating performance. The
definitions of EBITDA and free cash flow used here may differ from those used by other companies.
EBITDA and Free Cash Flow bridge
For the Quarter Ended | For the Year Ended | |||||||||||||||||||||||||||||||
December 31, | September 30, | December 31, | ||||||||||||||||||||||||||||||
2010 | 2009 | Change | 2010 | Change | 2010 | 2009 | Change | |||||||||||||||||||||||||
→ Income before Taxes |
$ | 60.6 | $ | 48.8 | 24 | % | $ | 57.2 | 6 | % | $ | 231.9 | $ | 168.8 | 37 | % | ||||||||||||||||
→ Depreciation and Amortization |
13.2 | 14.4 | (9 | ) | 15.2 | (13 | ) | 58.1 | 56.3 | 3 | ||||||||||||||||||||||
→ Interest |
5.0 | 4.0 | 25 | 4.2 | 19 | 16.1 | 17.2 | (6 | ) | |||||||||||||||||||||||
→ EBITDA |
$ | 78.8 | $ | 67.2 | 17 | $ | 76.6 | 3 | $ | 306.1 | $ | 242.3 | 26 | |||||||||||||||||||
→ Cash Flow from Operating Activities |
$ | 24.0 | $ | 54.9 | (56) | % | $ | 61.6 | (61) | % | $ | 181.4 | $ | 212.5 | (15 | )% | ||||||||||||||||
→ Capital Expenditures |
(5.7 | ) | (6.7 | ) | (15 | ) | (8.5 | ) | (32 | ) | (31.7 | ) | (25.1 | ) | 27 | |||||||||||||||||
→ Excess Tax Benefit from
Stock-Based Compensation |
3.3 | 1.2 | n/m | 1.0 | n/m | 6.5 | 2.8 | n/m | ||||||||||||||||||||||||
→ Free Cash Flow |
$ | 21.6 | $ | 49.4 | (56 | ) | $ | 54.1 | (60) | $ | 156.2 | $ | 190.2 | (18 | ) | |||||||||||||||||
→ Forward starting interest rate swap |
$ | 31.0 | | n/m | | n/m | $ | 31.0 | | n/m | ||||||||||||||||||||||
→ Adjusted Free Cash Flow |
$ | 52.6 | $ | 49.4 | 6 | $ | 54.1 | (3) | $ | 187.2 | $ | 190.2 | (2 | ) | ||||||||||||||||||
Forward-Looking Statements
This news release contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended. These
statements may relate to, among other things, capital expenditures, cost reductions, cash flow,
and operating improvements and are indicated by words or phrases such as anticipate, estimate,
plans, expects, projects, should, will, management believes, the company believes,
the company intends, and similar words or phrases. These statements are subject to inherent
uncertainties and risks that could cause actual results to differ materially from those anticipated
at the date of this news release. The risks and uncertainties include, but are not limited to, the
following: economic and political consequences resulting from terrorist attacks and wars; levels of
industrial activity and economic conditions in the U.S. and other countries around the world;
pricing pressures and other competitive factors, and levels of capital spending in certain
industries all of which could have a material impact on order rates and IDEXs results,
particularly in light of the low levels of order backlogs it typically maintains; its ability to
make acquisitions and to integrate and operate acquired businesses on a profitable basis; the
relationship of the U.S. dollar to other currencies and its impact on pricing and cost
competitiveness; political and economic conditions in foreign countries in which the company
operates; interest rates; capacity utilization and the effect this has on costs; labor markets;
market conditions and material costs; and developments with respect to contingencies, such as
litigation and environmental matters. The forward-looking statements included here are only made as
of the date of this news release, and management undertakes no obligation to publicly update them
to reflect subsequent events or circumstances. Investors are cautioned not to rely unduly on
forward-looking statements when evaluating the information presented here.
About IDEX
IDEX Corporation is an applied solutions company specializing in fluid and metering technologies,
health and science technologies, dispensing equipment, and fire, safety and other diversified
products built to its customers exacting specifications. Its products are sold in niche markets to
a wide range of industries throughout the world. IDEX shares are traded on the New York Stock
Exchange and Chicago Stock Exchange under the symbol IEX.
For further information on IDEX Corporation and its business units, visit the companys Web site at www.idexcorp.com.
(Tables follow)
IDEX CORPORATION
IDEX CORPORATION
Condensed Statements of Consolidated Operations
(in thousands except per share amounts)
(unaudited)
Condensed Statements of Consolidated Operations
(in thousands except per share amounts)
(unaudited)
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net sales |
$ | 405,218 | $ | 343,344 | $ | 1,513,073 | $ | 1,329,661 | ||||||||
Cost of sales |
243,230 | 204,311 | 894,590 | 807,275 | ||||||||||||
Gross profit |
161,988 | 139,033 | 618,483 | 522,386 | ||||||||||||
Selling, general and administrative expenses |
91,311 | 82,766 | 358,272 | 325,453 | ||||||||||||
Restructuring expenses |
4,673 | 3,826 | 11,095 | 12,079 | ||||||||||||
Operating income |
66,004 | 52,441 | 249,116 | 184,854 | ||||||||||||
Other income (expense) net |
(484 | ) | 345 | (1,092 | ) | 1,151 | ||||||||||
Interest expense |
4,955 | 3,966 | 16,150 | 17,178 | ||||||||||||
Income before income taxes |
60,565 | 48,820 | 231,874 | 168,827 | ||||||||||||
Provision for income taxes |
19,052 | 15,733 | 74,774 | 55,436 | ||||||||||||
Net income |
$ | 41,513 | $ | 33,087 | $ | 157,100 | $ | 113,391 | ||||||||
Earnings per Common Share: |
||||||||||||||||
Basic earnings per common share (a) |
$ | 0.51 | $ | 0.41 | $ | 1.93 | $ | 1.41 | ||||||||
Diluted earnings per common share (a) |
$ | 0.50 | $ | 0.40 | $ | 1.90 | $ | 1.40 | ||||||||
Share Data: |
||||||||||||||||
Basic weighted average common shares outstanding |
80,899 | 79,937 | 80,466 | 79,716 | ||||||||||||
Diluted weighted average common shares outstanding |
82,686 | 81,303 | 81,983 | 80,727 |
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
(in thousands)
(unaudited)
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
Assets |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | 235,136 | $ | 73,526 | ||||
Receivables net |
213,553 | 183,178 | ||||||
Inventories |
196,546 | 159,463 | ||||||
Other current assets |
47,523 | 35,545 | ||||||
Total current assets |
692,758 | 451,712 | ||||||
Property, plant and equipment net |
188,562 | 178,283 | ||||||
Goodwill and intangible assets |
1,488,393 | 1,461,799 | ||||||
Other noncurrent assets |
23,710 | 6,363 | ||||||
Total assets |
$ | 2,393,423 | $ | 2,098,157 | ||||
Liabilities and shareholders equity |
||||||||
Current liabilities |
||||||||
Trade accounts payable |
$ | 104,055 | $ | 73,020 | ||||
Accrued expenses |
117,879 | 98,730 | ||||||
Short-term borrowings |
119,445 | 8,346 | ||||||
Dividends payable |
12,289 | 9,586 | ||||||
Total current liabilities |
353,668 | 189,682 | ||||||
Long-term borrowings |
408,450 | 391,754 | ||||||
Other noncurrent liabilities |
255,645 | 248,617 | ||||||
Total liabilities |
1,017,763 | 830,053 | ||||||
Shareholders equity |
1,375,660 | 1,268,104 | ||||||
Total liabilities and shareholders equity |
$ | 2,393,423 | $ | 2,098,157 | ||||
-more-
IDEX CORPORATION
IDEX CORPORATION
Company and Business Group Financial Information
(dollars in thousands)
(unaudited)
Company and Business Group Financial Information
(dollars in thousands)
(unaudited)
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 (b) | 2009 | 2010 (b) | 2009 | |||||||||||||
Fluid & Metering Technologies |
||||||||||||||||
Net sales |
$ | 205,639 | $ | 170,151 | $ | 729,945 | $ | 641,108 | ||||||||
Operating income (c) |
38,871 | 30,486 | 134,894 | 104,259 | ||||||||||||
Operating margin |
18.9 | % | 17.9 | % | 18.5 | % | 16.3 | % | ||||||||
Depreciation and amortization |
$ | 8,574 | $ | 8,188 | $ | 33,134 | $ | 32,584 | ||||||||
Capital expenditures |
4,278 | 3,185 | 17,308 | 12,867 | ||||||||||||
Health & Science Technologies |
||||||||||||||||
Net sales |
$ | 104,871 | $ | 80,187 | $ | 397,198 | $ | 304,329 | ||||||||
Operating income (c) |
23,574 | 17,794 | 87,494 | 55,216 | ||||||||||||
Operating margin |
22.5 | % | 22.2 | % | 22.0 | % | 18.1 | % | ||||||||
Depreciation and amortization |
$ | 3,493 | $ | 3,714 | $ | 16,012 | $ | 14,293 | ||||||||
Capital expenditures |
1,457 | 2,572 | 7,516 | 6,365 | ||||||||||||
Dispensing Equipment |
||||||||||||||||
Net sales |
$ | 24,151 | $ | 23,168 | $ | 125,320 | $ | 127,279 | ||||||||
Operating income (c) |
949 | 2,843 | 20,131 | 17,162 | ||||||||||||
Operating margin |
3.9 | % | 12.3 | % | 16.1 | % | 13.5 | % | ||||||||
Depreciation and amortization |
$ | 773 | $ | 784 | $ | 3,753 | $ | 3,124 | ||||||||
Capital expenditures |
242 | 14 | 1,129 | 864 | ||||||||||||
Fire & Safety/Diversified Products |
||||||||||||||||
Net sales |
$ | 71,116 | $ | 70,176 | $ | 265,501 | $ | 262,809 | ||||||||
Operating income (c) |
18,925 | 17,927 | 63,433 | 61,192 | ||||||||||||
Operating margin |
26.6 | % | 25.5 | % | 23.9 | % | 23.3 | % | ||||||||
Depreciation and amortization |
$ | 892 | $ | 1,513 | $ | 4,885 | $ | 5,328 | ||||||||
Capital expenditures |
851 | 1,117 | 3,513 | 3,686 | ||||||||||||
Company |
||||||||||||||||
Net sales |
$ | 405,218 | $ | 343,344 | $ | 1,513,073 | $ | 1,329,661 | ||||||||
Operating income (d) |
70,677 | 56,267 | 260,211 | 196,933 | ||||||||||||
Operating margin |
17.4 | % | 16.4 | % | 17.2 | % | 14.8 | % | ||||||||
Depreciation and amortization (e) |
$ | 13,220 | $ | 14,453 | $ | 58,108 | $ | 56,346 | ||||||||
Capital expenditures |
6,797 | 7,222 | 32,769 | 25,525 |
(a) | Calculated by applying the two-class method of allocating earnings to common stock and participating securities as required by ASC 260, Earnings Per Share. | |
(b) | Three and twelve month data includes acquisitions of OBL (July 2010) and Fitzpatrick (November 2010) in the Fluid & Metering Technologies Group and Seals (April 2010) in the Health & Science Technologies Group from the date of acquisition. | |
(c) | Group operating income excludes unallocated corporate operating expenses and restructuring related charges. | |
(d) | Company operating income excludes restructuring related charges. | |
(e) | Excludes amortization of debt issuance expenses. |