IDEX Reports Double Digit Growth
IDEX Corporation announced its financial results for the three- and twelve-month periods ended December 31, 2005. Orders in the fourth quarter were up 9 percent, sales increased 8 percent and net income rose 27 percent to $28.7 million.
Diluted earnings per share were 54 cents versus 43 cents in the year-ago quarter. For the full year 2005, orders and sales both increased 12 percent and diluted earnings per share were $2.09, up 24 percent versus 2004.
- Orders for 2005 were $1.057 billion, 12 percent higher than a year ago; excluding foreign currency translation and acquisitions, organic growth was 10 percent.
- Full year sales of $1.043 billion rose 12 percent; excluding foreign currency translation and acquisitions, organic sales growth was 10 percent.
- Operating margins at 17.5 percent were 140 basis points higher than a year ago.
- Net income increased 27 percent to $109.8 million.
- Diluted EPS at $2.09 was 41 cents ahead of last year.
- EBITDA of $213.3 million was 20.4 percent of sales and covered interest expense by nearly 15 times.
- Free cash flow was strong at $121.2 million and 1.1 times net income.
- Operational excellence initiatives continue to fuel product innovation to drive growth.
2005 Orders, Sales, Net Income and EPS Ahead of Last Year
New orders for the year totaled $1.057 billion, 12 percent higher than last year. Excluding the impact of foreign currency translation and acquisitions, orders were 10 percent higher in 2005 than in 2004.
Sales for 2005 increased 12 percent to $1.043 billion. Excluding the impact of foreign currency translation and acquisitions, organic growth was 10 percent. Organic growth was 12 percent domestically and 7 percent internationally. Sales to international customers represented approximately 43 percent of total sales for 2005 versus 44 percent last year.
For the year, operating margins were 17.5 percent, 140 basis points higher than the 16.1 percent reported in the prior year. This improvement reflects a 60 basis point improvement in gross margin to 40.6 percent, resulting mainly from volume leverage and the company's global sourcing and operational excellence initiatives. Selling, general and administrative (SG&A) expenses as a percent of sales of 23.1 percent decreased by 80 basis points from 2004. Higher total SG&A expenses reflect acquisitions, volume-related expenses, and reinvestment in the business to drive organic growth.
Net income of $109.8 million increased 27 percent compared to 2004. Diluted earnings per share of $2.09 rose 41 cents, or 24 percent, from the $1.68 per share recorded in 2004.
Q4 Orders, Sales, Net Income and EPS Up Year-over-Year
New orders in the quarter totaled $259.5 million, 9 percent higher than the same period in 2004. Excluding the impact of foreign currency translation, orders were up 11 percent as foreign currency rates had a negative impact of 2 percent. As of December 31, 2005, the company had an unfilled order backlog of just over one month's sales.
Sales in the fourth quarter of $261.5 million rose 8 percent from the prior year period. Excluding the impact of foreign currency translation, organic growth was 10 percent. Organic growth was 13 percent domestically and 6 percent internationally during the quarter. Sales to international customers represented 42 percent of total sales for the fourth quarter of 2005 versus 43 percent in the year-ago quarter.
Fourth quarter 2005 operating margin of 18.1 percent of sales was 230 basis points higher than the fourth quarter of 2004. Fourth quarter 2005 gross margin of 40.6 percent of sales was 100 basis points higher than last year's fourth quarter. This improvement reflects volume leverage and savings realized from the company's operational excellence and global sourcing initiatives. SG&A expenses as a percent of sales decreased 130 basis points from the fourth quarter of 2004 to 22.5 percent. Total SG&A expenses increased due primarily to higher volume.
Net income of $28.7 million increased 27 percent over the fourth quarter of 2004. Diluted earnings per share of 54 cents improved 11 cents from the fourth quarter of 2004.
Q4 Segment Results
Pump Products sales in the fourth quarter of $157.5 million reflected 10 percent organic growth. Operating margin of 19.5 percent represented a 220 basis point improvement compared with the fourth quarter of 2004.
Dispensing Equipment sales of $42.4 million in the fourth quarter reflected 2 percent organic growth. Operating margin of 19.1 percent represented a 290 basis point improvement compared with the fourth quarter of 2004.
Sales of Other Engineered Products during the fourth quarter of $62.8 million reflected 15 percent organic growth. Operating margin of 25.7 percent represented a 240 basis point improvement compared with the fourth quarter of 2004.
For the full year, the Pump Products Group contributed 59 percent of sales and 54 percent of operating income; the Dispensing Equipment Group accounted for 18 percent of sales and 19 percent of operating income; and Other Engineered Products represented 23 percent of sales and 27 percent of operating income.
Strong Financial Position
IDEX ended the year with total assets of $1.244 billion and working capital of $194.2 million. Total debt was $158.4 million at December 31, 2005. Free cash flow (cash flow from operating activities less capital expenditures) for 2005 was $121.2 million. EBITDA (earnings before interest, taxes, depreciation and amortization) totaled $213.3 million (20.4 percent of sales) and covered interest expense by nearly 15 times.
Acquisition of Airshore International
In a strategic expansion of our Hale Products business, on January 12, 2006, IDEX acquired the assets used to conduct the Airshore International business of Direct Equipment West, Ltd. Revenue in 2005 for Airshore was approximately $5 million. Based in British Columbia, Canada, the Airshore business provides stabilization struts for collapsed buildings and vehicles, high and low pressure lifting bags and forcible entry tools for the fire and rescue markets. Commenting on the acquisition, Kingsley said, "Airshore brings expanded capability to our global fire and rescue platform, at a time when both natural and manmade disasters are increasing the need for shoring solutions worldwide."
"We are encouraged by our recent performance and remain focused on delivering consistent, sustainable sales and earnings growth," Kingsley said. "Our emphasis on new product innovation and continuous process improvement is clearly delivering top- and bottom-line growth. Our growth capability, coupled with our developing know-how for applying the most advanced mixed model manufacturing tools, will continue to enhance our ability to drive operating performance. As we move forward in 2006, we remain well positioned to meet our customers' emerging needs for applied engineering solutions anywhere in the world."
Source: IDEX Corporation