IDEX Corporation IEX reported strong fourth-quarter 2017 results driven by significant organic growth and diligent execution of operational plans. GAAP earnings for the reported quarter were $93.7 million or $1.21 per share compared with $57.3 million or 75 cents per share in the year-earlier quarter. The year-over-year improvement was primarily attributable to top-line growth. Excluding restructuring and other non-recurring items, adjusted earnings for the reported quarter were $1.12 per share, which beat the Zacks Consensus Estimate of $1.07. The company reported adjusted earnings of $4.31 per share for full-year 2017. GAAP earnings for the year were $337.3 million or $4.36 per share compared with $271.1 million or $3.53 per share in the prior year.

Net sales in the reported quarter came in at $585.9 million compared with $530.4 million in the year-ago quarter. Quarterly sales exceeded the Zacks Consensus Estimate of $573 million. The top-line increase was primarily attributable to organic growth of 9%. By successfully investing in product innovations, business development and reallocating resources, there was growth in revenues across all segments of the company which helped drive total revenues.

For 2017, the company reported total revenues of $2,287.3 million compared with $2,113 million in the previous year.

IDEX Corporation Price, Consensus and EPS Surprise

 

IDEX Corporation Price, Consensus and EPS Surprise | IDEX Corporation Quote

Segmental Details

Net sales of Fluid & Metering Technologies were $222.1 million compared with $207.1 million in the prior-year quarter primarily led by organic growth of 7% in the quarter.

Aggregate quarterly revenues from Health & Science Technologies came in at $208.9 million compared with $188.3 million in the year-ago quarter, driven by organic growth of 11%.

Fire & Safety/Diversified Products revenues were $155.5 million, up from $135 million in the year-ago quarter, with organic growth of 12%.

Margins

Adjusted operating income for the reported quarter was $129.6 million compared with $109.4 million in the year-ago period with adjusted operating margin of 22.1% – up 150 basis points year over year. The increase in adjusted operating income, despite rise in operating expenses, is due to significant top-line growth. Adjusted EBITDA (earnings before interest, taxes depreciation and amortization) was $149.4 million with adjusted EBITDA margin of 25.5% compared with $134.8 million and 25.4%, respectively, in the year-ago period.

Adjusted operating income for Fluid & Metering Technologies increased 11.1% year over year to $63 million with margin expansion of 100 bps, making the adjusted operating margin 28.4%.

Adjusted operating income of Health & Science Technologies increased 30.2% year over year to $46.6 million with margin expansion of 330 bps, making the adjusted operating margin 22.3%.

Adjusted operating profit of Fire & Safety/Diversified Products increased 26.8% year over year to $41.2 million with margin expansion of 250 bps, making the adjusted operating margin 26.5%.

Balance Sheet and Cash Flow

IDEX exited 2017 with cash and cash equivalents of $376 million compared with $236 million of the previous year. Long-term debt was $858.8 million compared with $1,014.2 million of the prior year.

For 2017, the company generated net cash of $432.8 million from its operating activities, up from $400 million recorded a year ago.

Free cash flow for the quarter totaled $120.4 million, up 14% from the prior-year period.

Outlook

IDEX is poised to gain from robust organic growth, disciplined capital deployment and a favorable global macroeconomic environment. Backed by these positives, this Zacks Rank #3 (Hold) company has given bullish full-year 2018 earnings guidance. Full-year 2018 EPS is currently anticipated to lie within the $4.90-$5.10 per share range with EPS for the first quarter expected in the range of $1.20 to $1.24.

Stocks to Consider

Better-ranked stocks worth considering in the industry include EnPro Industries, Inc. NPO, Illinois Tool Works Inc. ITW and Altra Industrial Motion Corp. AIMC each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

EnPro Industries has an expected long-term earnings growth rate of 15.5%.

Illinois Tool Works has an expected long-term earnings growth rate of 10.1%.

Altra Industrial Motion Corp has exceeded estimates in each of the trailing four quarters with an average beat of 17.3%.

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