IDEX Reports Record First Quarter Orders, Sales and Net Income
IDEX Corporation announced record financial results for the three months ended March 31, 2005. Sales were up 17 percent, orders increased 12 percent, and net income rose 34 percent from the first quarter of 2004. Diluted earnings per share were 45 cents versus 35 cents in the year-ago period.
First Quarter 2005 Highlights
- Orders were a record $266.6 million, 12 percent higher than a year ago; base business orders - excluding acquisitions and foreign currency translation - were up 5 percent.
- Sales of $252.1 million set a new record and rose more than 17 percent; base business sales - excluding acquisitions and foreign currency translation - were up 10 percent.
- Gross margins improved 50 basis points to 40.4 percent of sales, while operating margins at 16.1 percent were 150 basis points higher than a year ago.
- Net income increased 34 percent to $23.6 million, an all-time high.
- Diluted EPS at 45 cents were 10 cents ahead of the first quarter of 2004.
- EBITDA of $48.7 million was 19.3 percent of sales and covered interest expense by more than 12 times.
- Debt-to-total capitalization was 23 percent.
- Free cash flow was $10.6 million.
- Operational excellence initiatives remain on track, fuelingnew product innovation to drive growth.
Orders, Sales, Net Income and EPS Up Sequentially and Year-over-Year
New orders in the quarter totaled a record $266.6 million, 12 percent higher than the same period in 2004 and up 12 percent sequentially. Excluding the impact of foreign currency translation and acquisitions, orders were 5 percent higher than the first quarter of 2004. At March 31, 2005, the company had an unfilled order backlog of just over one month's sales.
Record sales in the first quarter of 2005 of $252.1 million were up more than 17 percent from the prior-year period and up 4 percent sequentially. Compared with last year, base business shipments grew 10 percent, acquisitions accounted for a 6 percent improvement, and foreign currency translation added 1 percent. Base business sales grew 11 percent domestically and 9 percent internationally during the recent quarter. Sales to international customers from base businesses represented approximately 46 percent of total sales for both the 2005 and 2004 first quarters.
First quarter 2005 gross margin of 40.4 percent of sales was 50 basis points higher than last year's first quarter and 80 basis points higher than the fourth quarter of 2004. This improvement reflects volume leverage and savings realized from the company's Six Sigma, Lean Manufacturing and global sourcing initiatives. SG&A expenses as a percent of sales decreased 100 basis points to 24.3 percent from 25.3 percent in the first quarter of 2004. Total SG&A expenses increased due to acquisitions, currency effects, and expenses related to higher volume. First quarter 2005 operating margin of 16.1 percent of sales was 150 basis points higher than the first quarter of 2004 and 30 basis points ahead of the fourth quarter of 2004.
Net income at $23.6 million was a new record and increased 34 percent over the first quarter of 2004 and 4 percent sequentially. Diluted earnings per share of 45 cents improved 10 cents from the first quarter of 2004 and were up 2 cents from the fourth quarter of 2004.
Pump Product sales of $146.3 million rose 21 percent, reflecting 10 percent base business growth, a 1 percent favorable impact from foreign currency translation, and a 10 percent increase due to acquisitions. Operating profit of $24.3 million represented a 110 basis point operating margin improvement compared with the first quarter of 2004.
Dispensing Equipment sales of $51.3 million rose 23 percent, reflecting a 20 percent increase in base business and a 3 percent impact from favorable foreign currency translation. Operating profit of $11.6 million represented a 360 basis point operating margin improvement compared with a year ago.
Sales of Other Engineered Products were $55.6 million, an increase of 6 percent, reflecting 4 percent base business growth and 2 percent favorable foreign currency translation. Operating profit of $11.6 million represented a 50 basis point operating margin improvement compared to the year-ago quarter.
During the quarter, the Pump Products Group contributed 58 percent of sales and 51 percent of operating income; the Dispensing Equipment Group accounted for 20 percent of sales and 25 percent of operating income; and Other Engineered Products represented 22 percent of sales and 24 percent of operating income.
Strong Financial Position
IDEX ended the first quarter with total assets of $1.2 billion and working capital of $131.8 million. Total debt decreased $7.5 million during the quarter to $217.8 million. Free cash flow (cash flow from operating activities less capital expenditures) for the first three months of 2005 was $10.6 million versus $14.1 million in 2004, reflecting an increase in receivables as a result of higher sales. In the first quarter of 2005, EBITDA (earnings before interest, taxes, depreciation and amortization) totaled $48.7 million (19.3 percent of sales) and covered interest expense by more than 12 times. Debt-to-total capitalization at March 31, 2005, was 23 percent.
Progress Continues on Corporate Initiatives
"We continue to use our long-term initiatives to create top- and bottom-line growth," Lawrence D.Kingsley, President and Chief Executive Officer said. "Our drive for continuous process improvement is increasing the gross margin. First quarter gross margins of 40.4 percent improved 50 basis points versus the prior year and 80 basis points sequentially. First quarter savings from our operational excellence tools of Lean and Six Sigma totaled $2.5 million. In addition, during the quarter, global sourcing initiatives saved the company $2.8 million, or 25 percent over prior sources."
Looking ahead, Kingsley said, "As a short-cycle business, our performance is reliant upon the current pace of incoming orders, and we have limited visibility on future business conditions. As we move forward in 2005, we believe IDEX is well positioned for earnings expansion. This is based on our lower cost structure resulting from our operational excellence discipline, our investment in new products, applications and global markets, and our pursuit of strategic acquisitions to help drive IDEX's longer term profitable growth."
Source: IDEX Corporation