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IDEX (IEX) Q4 Earnings & Revenues Beat, Increase Y/Y

IDEX Corporation IEX reported impressive fourth-quarter 2022 results. The company’s earnings surpassed the Zacks Consensus Estimate by 1.5%, whereas sales beat the same by 4.9%.

In the reported quarter, IDEX’s adjusted earnings were $2.01 per share, beating the Zacks Consensus Estimate of $1.98. Our estimate for fourth-quarter adjusted earnings was $1.94. On a year-over-year basis, the bottom line increased 29.7% from the year-ago quarter’s $1.55. Healthy segmental results favorably impacted the quarter’s earnings.

Earnings for the fourth quarter exceeded management’s projection of $1.92-$1.97.

Revenue Details

In the quarter under review, IDEX’s net sales were $810.7 million, reflecting year-over-year growth of 13.4%. Organic sales in the quarter increased 12% year over year, higher than 9% growth expected by IEX. Acquired assets boosted sales 5%. Foreign currency translation left a negative impact of 4%.

IDEX’s top line surpassed the Zacks Consensus Estimate of $773 million. Our estimate for net sales in the reported quarter was $756.3 million.

IEX reports net sales under three business segments, the results of which are discussed below:

Revenues from Fluid & Metering Technologies totaled $287.8 million, increasing 12.2% year over year. Our estimate for segmental revenues was $277.2 million. Organic sales were up 9% and synergies from acquired assets added 8%. Foreign currency translation left a negative impact of 3%.

Revenues from Health & Science Technologies totaled $353 million, reflecting year-over-year growth of 20%. Our estimate for segmental revenues was $313.7 million. Organic sales in the quarter increased 19% year over year, while acquired assets boosted sales 5%. Foreign currency translation left a negative impact of 4%.

Revenues from Fire & Safety/Diversified Products totaled $170.9 million, rising 1.4% year over year. Our estimate for segmental revenues was $166.3 million. The results were aided by a 6% increase in organic sales but suffered 5% forex woes.

IDEX Corporation Price, Consensus and EPS Surprise

 

IDEX Corporation price-consensus-eps-surprise-chart | IDEX Corporation Quote

 

Margin Profile

In the quarter under review, IDEX’s cost of sales increased 16.1% year over year to $465.0 million. The adjusted gross profit was $353.8 million, up 12.6% year over year, while the adjusted gross margin was 43.6% compared with 44% reported in the year-ago quarter.

Selling, general and administrative expenses increased 10% year over year to $169 million. The same represented 20.8% of revenues. Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) in the quarter under review increased 13.9% year over year to $218.9 million. The adjusted EBITDA margin increased 10 bps year over year to 29%.

The adjusted operating income was $184.8 million, up 13.6% year over year, whereas the margin was 22.8%, flat year over year. Interest expenses in the quarter increased 26% year over year to $12.1 million.

Balance Sheet and Cash Flow

While exiting the fourth quarter, IDEX’s cash and cash equivalents decreased 49.7% to $430.2 million compared with $855.4 million recorded at the end of fourth-quarter 2021. Long-term borrowings were $1,468.7 million compared with $1,190.3 million recorded at the end of fourth-quarter 2021.

In the twelve months of 2022, IDEX generated net cash of $557.4 million from operating activities, decreasing 1.4% from the year-ago period. Capital used for purchasing property, plant and equipment was $68 million compared with $72.7 million in 2021. Free cash flow was $489.4 million, down 0.6% year over year.

IEX paid out dividends totaling $177.4 million and repurchased common stocks worth $148.1 million.

The amount spent on acquisitions, net of acquired cash, totaled $945.6 million.

Outlook

For first-quarter 2023, IDEX anticipates adjusted earnings of $1.98-$2.03 per share and 3-5% growth in organic sales from the respective year-ago readings.

IEX predicts EPS of $1.74-$1.79 per share for fourth-quarter 2022.

For 2023, IDEX anticipates adjusted earnings of $8.50-$8.80 per share. Full-year earnings are predicted to be $7.55-$7.85.

Organic sales are predicted to grow 1-5% for 2023.

Zacks Rank & Other Stocks to Consider

IEX currently carries a Zacks Rank #2 (Buy). Some other top-ranked companies from the Industrial Products sector are discussed below:

Applied Industrial Technologies, Inc. AIT presently sports a Zacks Rank #1 (Strong Buy) and a trailing four-quarter earnings surprise of 20.1%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks.

AIT’s earnings estimates have increased 6.5% for fiscal 2023 (ending June 2023) in the past 60 days. Shares of Applied Industrial have risen 41.9% in the past six months.

Allegion plc ALLE presently carries a Zacks Rank of 2. ALLE’s earnings surprise in the last four quarters was 8.8%, on average.

In the past 60 days, Allegion’s earnings estimates have remained steady for 2022. The stock has gained 14.4% in the past six months.

Valmont Industries, Inc. VMI presently has a Zacks Rank of 2. VMI’s earnings surprise in the last four quarters was 12.5%, on average.

In the past 60 days, Valmont’s earnings estimates have increased by a penny. The stock has rallied 22.4% in the past six months.

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