IDEX Corporation (IEX) reported strong third-quarter 2014 results with a healthy year-over-year increase in revenues and earnings on the back of focused organic growth strategies.
Net income came in at $71.4 million versus $63.8 million in the year-ago quarter, reflecting year-over-year growth of 12.0%. Earnings per share were 88 cents, up 13.0% over the year-ago quarter tally of 78 cents. The reported earnings comfortably beat the Zacks Consensus Estimate of 84 cents. The year-over-year improvement in earnings was primarily driven by a solid increase in revenues and productivity-improvement initiatives.
Revenues
Net sales improved to $533.2 million, up 9.0% from $490.6 million in the prior-year period. The reported sales comfortably beat the Zacks Consensus Estimate of $522 million. Organic growth contributed 7% to sales, while inorganic growth and foreign currency translation contributed 1% each.
Orders came in at $507 million in the reported quarter, down 5% year over year.
By segments, Fluid and Metering Technologies (FMT) reflected a 5% year-over-year sales growth to $223.3 million. Organic and inorganic growth for the segment increased 4% and 1% year over year, respectively. The Health and Science Technologies (HST) segment revenues came in at $190.9 million, improving 7.0% year over year, while the Fire and Safety/Diversified Products (FSD) segment recorded sales of $120.3 million, up 19.0% year over year. Both segments saw solid organic growth, which translated into higher revenues.
Margins
Operating income was up 14.0% year over year to $111.0 million. Operating margin improved 100 basis points to 20.8%, driven by enhanced productivity and volume leverage. Earnings before Interest, Taxes Depreciation and Amortization (EBITDA) were $131.4 million, up 12.0% from the year-ago period.
The FMT segment recorded an operating margin of 24.5%, up 10 basis points year over year. Margins for the segment were driven by higher volume and productivity initiatives.
The HST segment’s operating margin came in at 22.1%, up 150 basis points from the prior-year quarter, driven by improved volume and productivity initiatives.
The Fire and Safety segment recorded an operating margin of 26.1%, up 420 basis points from the year-ago quarter. The increase was primarily attributable to volume leverage and productivity initiatives.
Balance Sheet and Cash Flow
As of Sep 30, 2014, IDEX Corporation had cash and cash equivalents of $487.1 million, while long-term debt stood at $720.2 million.
Cash flow from operating activities aggregated $100.4 million compared with $118.4 million in the previous year. Free cash flow was $91.6 million at this quarter end versus $113.2 million in the year-ago period.
IDEX Corporation repurchased 831,000 shares for $64 million during the quarter, bringing the year-to-date tally to 2.0 million shares for $150 million,. It plans to continue its share repurchase and dividend programs, as part of its long-term strategy to provide attractive risk-adjusted returns to its stockholders.
Outlook
IDEX Corporation 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.
The company expects fourth-quarter 2014 earnings in the range of 85 cents–88 cents per share and full-year 2014 earnings in the range of $3.52 to $3.55. The company expects fourth-quarter organic revenue growth to be in the low-to-mid single digits, resulting in full-year 2014 organic revenue growth of 5.0%–6.0% with operating margins exceeding 20%.
IDEX Corporation currently has a Zacks Rank #3 (Hold). Other stocks that look promising and are worth a look now include Barnes Group Inc. (B), Manitex International, Inc. (MNTX) and Nordson Corporation (NDSN) each carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment