IDEX Q2 Earnings Top Estimates, Sales Miss, '24 View Down

IDEX Corporation's IEX second-quarter 2024 adjusted earnings of $2.06 per share surpassed the Zacks Consensus Estimate of $2.04. The bottom line decreased approximately 6% from the year-ago quarter's earnings of $2.18 per share. However, it exceeded management's projection of $2.00-$2.05 per share.

Revenue Details

IDEX's net sales of $807.2 million missed the Zacks Consensus Estimate of $831 million.  The top line also decreased 5% year over year. Organic sales decreased 4% year over year. Foreign currency translation had a negative impact on sales by 1%.

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

Net sales from the Fluid & Metering Technologies segment totaled $319.4 million, down 2% year over year. Our estimate for segmental net sales was $327 million. While organic sales were flat year over, acquisition/divestitures and foreign currency translation each had a negative impact of 1% on sales.

Net sales from the Health & Science Technologies segment totaled $303.8 million, indicating a year-over-year decline of 11%. Our estimate for segmental net sales was $321 million. Organic sales declined 11% year over year.

Net sales from the Fire & Safety/Diversified Products segment totaled $185.4 million, which increased marginally year over year. Our estimate for segmental net sales was $185 million. Organic sales increased 1% on a year-over-year basis while foreign currency translation hurt sales by 1%.

Margin Profile

IDEX's cost of sales decreased 5.9% year over year to $440.4 million. The gross profit was $366.8 million, down 3% year over year. The gross margin was 45.4% compared with 44.7% in the year-ago quarter.

Selling, general and administrative expenses increased 4.9% year over year to $182.8 million. Adjusted EBITDA decreased 6.9% year over year to $224.2 million. The adjusted EBITDA margin decreased 60 bps year over year to 27.8%.

The operating income was $182.7 million, down 8.7% year over year. The operating margin was 22.6%, down 100 bps year over year. Interest expenses (net) decreased 39.1% year over year to $8.1 million.

Balance Sheet and Cash Flow

While exiting the second quarter, IDEX's cash and cash equivalents were $700.7 million compared with $534.3 million at the end of fourth-quarter 2023. Long-term borrowings (net) were $1.30 billion compared with $1.33 billion at the end of fourth-quarter 2023.

In the first six months of 2024, IDEX generated net cash of $290.2 million from operating activities, up 0.4% from the year-ago period. Capital expenditures were $35.9 million compared with $48.2 million in the first six months of 2023. In the same period, free cash flow was $254.3 million, up 5.5% year over year.

Idex paid out dividends totaling $100.7 million in the first six months of 2024, up 7.2% year over year.

Outlook

For the third quarter, IDEX anticipates adjusted earnings to be in the band of $1.85-$1.90 per share.

On a GAAP basis, IEX predicts earnings to be in the range of $1.61-$1.66 per share and a 0-1% increase in organic sales from the respective year-ago readings.

For 2024, IDEX anticipates adjusted earnings to be $7.80-$7.90 per share, down from the earlier projected range of $8.15 - $8.45. The figure indicates a decrease from earnings of $8.22 per share reported in 2023. On a GAAP basis, earnings are predicted to be $6.85-$6.95 per share, down from the earlier guided range of $7.13-$7.43.

Organic sales are predicted to decline 1-2% compared with the 0-2% decline guided earlier.

Zacks Rank & Stocks to Consider

IDEX currently carries a Zacks Rank #4 (Sell). Some better-ranked companies from the Industrial Products sector have been discussed below:

Kadant Inc. KAI presently sports a Zacks Rank #1 (Strong Buy).

It has a trailing four-quarter average earnings surprise of 18%.

The Zacks Consensus Estimate for KAI's 2024 earnings has increased 0.2% in the past 60 days.

Flowserve Corporation FLS currently carries a Zacks Rank #2 (Buy). FLS delivered a trailing four-quarter average earnings surprise of 18.2%.

In the past 60 days, the consensus estimate for Flowserve's 2024 earnings has increased 0.8%.

Emerson Electric Co. EMR presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 10.7%.

In the past 60 days, the Zacks Consensus Estimate for EMR's 2024 earnings has increased 0.4%.

To read this article on Zacks.com click here.