IDEX Corporation (IEX) reported adjusted net income of $71.1 million or 89 cents per share in fourth-quarter 2014 versus $67.6 million or 82 cents per share in the year-ago quarter. The adjusted earnings beat the Zacks Consensus Estimate by a couple of cents. The year-over-year improvement in earnings was primarily driven by higher revenues.
For full-year 2014, adjusted net income stood at $288.8 million or $3.57 per share versus $255.2 million or $3.09 per share in 2013. The adjusted earnings for full-year 2014 beat the Zacks Consensus Estimate of $3.55 per share.
GAAP net income in the reported quarter came in at $61.6 million or 77 cents per share versus $67.6 million or 82 cents per share in the year-earlier quarter. For full-year 2014, GAAP net income came in at $279.4 million or $3.45 per share versus $255.2 million or $3.09 per share in 2013.
Revenues
Net sales improved to $523.9 million in the reported quarter, up 1.0% year over year. The reported sales missed the Zacks Consensus Estimate of $535 million. Organic growth contributed 2% to sales, while acquisitions contributed 1%, partially offset by negative foreign currency translation impact of 2%.
Net sales improved to $2,147.8 million for full-year 2014, up 6% year over year. Organic growth contributed 5% to sales, while acquisitions contributed 1%.
Orders in the reported quarter stood at $517 million, down 1% from the year-ago quarter. Full year 2014 orders stood at $2.1 billion, up 2% from 2013.
By segments, Fluid and Metering Technologies (FMT) reflected a 2% increase from the prior-year period to $226.9 million. Organic and inorganic growth for the segment increased 2% year over year each. The Health and Science Technologies (HST) segment revenues came in at $189.1 million in the reported quarter, improving 4% from the prior-year quarter. The Fire and Safety/Diversified Products (FSD) segment recorded sales of $109.0 million, down 8% from the year-ago quarter due to lower volume within the Dispensing Equipment business.
Margins
Operating income stood at $94.4 million versus $103.9 million in the year-ago quarter. Adjusted Earnings before Interest, Taxes Depreciation and Amortization (EBITDA) stood at $128.2 million versus $122.8 million in the year ago quarter.
The FMT segment recorded an adjusted operating margin of 24.9% in the reported quarter, flat with the year-ago quarter.
The HST segment’s adjusted operating margin came in at 22.9%, up 470 basis points from the prior-year quarter, driven by improved volume and productivity initiatives.
The FSD segment recorded an adjusted operating margin of 22.5% in the reported quarter, down 180 basis points from the year-ago quarter. The year-over-year decrease was due to lower volumes.
Balance Sheet and Cash Flow
As of Dec 31, 2014, IDEX had cash and cash equivalents of $509.1 million compared with $439.6 million as of Dec 31, 2013. Long-term debt stood at $765.0 million at year end 2014 compared with $772.0 million at year-end 2013.
Cash flow from operating activities aggregated $368.0 million for full-year 2014 compared with $401.5 million in the previous year. Free cash flow was $326.2 million as of Dec 31, 2014 versus $378.5 million as of Dec 31, 2013.
IDEX repurchased 3 million shares of common stock for $223 million in 2014. It plans to continue with its share repurchase and dividend programs, as part of its long-term strategy to provide attractive risk-adjusted returns to its stockholders.
Outlook
IDEX remains optimistic about its top and bottom-line growth. The company intends to continue pursuing organic growth strategies as well as leverage inorganic growth opportunities through potentially lucrative acquisitions. However, some headwinds are expected in 2015 from large non-recurring projects of 2014, the strong U.S. dollar, falling oil prices and an uncertain global economy.
The company expects first-quarter 2015 earnings to be in the range of 81 cents–83 cents per share and full-year 2015 earnings in the range of $3.65 to $3.75. The company expects organic revenue growth to be approximately 1% to 2% in 2015 and operating margin of approximately 21%.
IDEX currently has a Zacks Rank #3 (Hold). Other stocks that look promising and are worth a look include Graham Corporation (GHM), carrying a Zacks Rank #1 (Strong Buy), and Kadant Inc (KAI) and Alamo Group, Inc. (ALG), both carrying a Zacks Rank #2 (Buy).
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