EXHIBIT 99.1
IDEX CORPORATION REPORTS RECORD ORDERS AND SALES
AND SIGNIFICANTLY INCREASED NET INCOME FOR THE FIRST QUARTER OF 2004
NORTHBROOK, IL, APRIL 22, 2004 - IDEX CORPORATION (NYSE: IEX) today announced
its financial results for the three months ended March 31, 2004. Orders
increased 15 percent, sales were up 10 percent, and net income rose 39 percent
from the first quarter of 2003. Diluted earnings per share were 52 cents versus
39 cents in the year-ago period.
FIRST QUARTER 2004 HIGHLIGHTS
o Orders increased 15 percent to a record $237.8 million; base business orders
- excluding acquisitions and foreign currency translation - were up 7
percent.
o Record sales of $214.6 million rose 10 percent.
o Gross margin improved 190 basis points to 39.9 percent of sales, while
operating margins at 14.6 percent were 260 basis points higher.
o Net income at $17.7 million increased 39 percent.
o Diluted EPS at 52 cents was 13 cents ahead of the first quarter of 2003.
o Cash flow from operating activities of $19.4 million increased 15 percent.
o Debt-to-total capitalization was 25 percent.
o Free cash flow, after a $6.7 million annual pension contribution, increased 8
percent to $14.1 million.
o The acquisition of Manfred Vetter was completed in January 2004.
o Operational excellence initiatives remain on track, fueling new product
innovation to drive growth.
o The Board has declared a 3-for-2 stock split and approved a 29 percent
increase in the company's quarterly cash dividend.
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"We are encouraged by our company's financial and operating performance during
the first three months of 2004. Improving economic conditions and global demand
enabled our business units to deliver historic high levels of orders and sales
and a 39 percent increase in first quarter earnings. The quarter reflects our
ninth consecutive quarter of year-over-year gross margin expansion, our seventh
consecutive quarter of year-over-year earnings growth, and our sixth consecutive
quarter of year-over-year growth in base business sales. Organic revenue growth
in our pump and engineered products businesses more than offset the slight
weakness we experienced during the quarter in dispensing equipment sales.
Although we are off to a strong start in 2004, our visibility for the remainder
of 2004 is limited due to the short cycle nature of our business. We continue to
use all the tools at our disposal to drive growth, profitability and cash
generation, positioning IDEX to deliver even stronger performance as the economy
improves."
Dennis K. Williams
Chairman, President and CEO
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FIRST QUARTER FINANCIAL HIGHLIGHTS
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(In millions, except per share amounts and percentages)
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FOR THE QUARTER ENDED
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March 31, December 31,
MARCH 31, ------------------------- -----------------------------
2004 2003 Change 2003 Change
---------------- ------------ ------------ ------------ ----------------
Orders Written $ 237.8 $ 206.1 15% $ 193.8 23%
Sales 214.6 195.5 10 198.0 8
Operating Income 31.3 23.4 34 28.0 12
Operating Margin 14.6% 12.0% 260 bp 14.1% 50 bp
Net Income $ 17.7 $ 12.7 39% $ 16.2 9%
Diluted EPS .52 .39 33 .48 8
Other Data
--Income before Taxes $ 27.9 $ 19.7 42% $ 25.1 11%
--Depreciation and Amortization 7.6 7.9 (4) 6.6 16
--Interest 3.4 3.7 (8) 3.4 -
--EBITDA 38.9 31.3 24 35.1 11
--Cash Flow from Operating Activities 19.4 16.9 15 21.4 (9)
--Capital Expenditures 5.3 3.8 41 6.7 (20)
--Free Cash Flow 14.1 13.1 8 14.7 (4)
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ORDERS, SALES, NET INCOME AND EPS UP SEQUENTIALLY AND YEAR-OVER-YEAR
New orders in the quarter totaled $237.8 million, 15 percent higher than the
same period in 2003 and up 23 percent from the 2003 fourth quarter. Excluding
the impact of foreign currency translation and acquisitions, orders were 7
percent higher than the first quarter of 2003 and 19 percent higher than the
fourth quarter of 2003. At March 31, 2004, the company had an unfilled order
backlog of just over one month's sales.
Sales in the first quarter of 2004 of $214.6 million were up 10 percent from the
prior-year period and up 8 percent sequentially. Compared with last year, base
business shipments grew 3 percent, foreign currency translation provided a 5
percent improvement, and acquisitions accounted for a 2 percent increase. Base
business sales grew 4 percent domestically and 2 percent internationally during
the recent quarter. Sales to international customers from base businesses
represented approximately 44 percent of total sales for both the 2004 and 2003
first quarters.
First quarter 2004 gross margins of 39.9 percent of sales were 190 basis points
higher than last year's first quarter and 120 basis points higher than the
fourth quarter of 2003. This improvement reflects volume leverage and savings
realized from the company's Global Sourcing, Six Sigma, Kaizen and Lean
Manufacturing initiatives. SG&A expenses as a percent of sales decreased to 25.3
percent from 26.0 percent in 2003. Total SG&A expense declined due to higher
than normal legal, professional and other costs in the first quarter of 2003,
offset by acquisitions, currency effects, and expenses related to higher volume
in this year's first quarter. SG&A expenses as a percent of sales increased
sequentially by 70 basis points. Total SG&A expense increased sequentially due
to acquisitions, currency effects, and volume-related expenses. First quarter
2004 operating margins of 14.6 percent of sales were 260 basis points higher
than the first quarter of 2003 and 50 basis points ahead of the fourth quarter
of 2003.
Net income at $17.7 million increased 39 percent over the first quarter of 2003
and 9 percent sequentially. Diluted earnings per share of 52 cents improved 13
cents from the first quarter of 2003 and were up 4 cents from the fourth quarter
of 2003.
SEGMENT RESULTS
Pump Product sales of $121.2 million rose 9 percent, reflecting 4 percent base
business growth, a 2 percent favorable impact from currency translation, and a 3
percent increase due to acquisitions. Operating profit of $18.8 million
represented a 140 basis point operating margin improvement compared with the
first quarter of 2003.
Dispensing Equipment sales of $41.6 million rose 6 percent, reflecting a 10
percent increase due to currency translation, offset by a 4 percent reduction in
base business related to weaker domestic demand. Operating profit of $7.9
million represented a 660 basis point operating margin improvement compared with
a year ago. Approximately half the improvement in operating margin year over
year was due to higher than normal expenses in the first quarter of 2003.
Sales of Other Engineered Products were $52.4 million, an increase of 14
percent, reflecting 6 percent base business growth, 6 percent favorable foreign
currency translation, and a 2 percent improvement due to acquisitions. Base
business sales in this segment increased due to strengthening global markets.
Operating profit of $10.7 million represented a 480 basis point operating margin
improvement compared to the year-ago quarter.
STRONG FINANCIAL POSITION AND FREE CASH FLOW
IDEX ended the first quarter with total assets of $1.02 billion and working
capital of $108.0 million. Total debt increased $22.2 million during the quarter
to $198.8 million. The increase reflects the acquisition of Manfred Vetter GmbH
in January 2004, partially offset by free cash flow generation during the
quarter. Free cash flow (cash flow from operating activities less capital
expenditures) for the first three months of 2004 was $14.1 million versus $13.1
million in 2003. Free cash flow during the first quarter of 2004 was impacted by
a $6.7 million annual pension plan contribution. At March 31, 2004, EBITDA
(earnings before interest, taxes, depreciation and amortization) totaled $38.9
million (18 percent of sales) and covered interest expense by more than 11
times. Debt-to-total capitalization at March 31, 2004 was 25 percent.
VETTER ACQUISITION
In January 2004, IDEX announced the acquisition of Manfred Vetter GmbH, a
manufacturer of rescue and environmental protection equipment, and disaster
control products. Based in Zulpich, Germany, with sales of approximately $15
million, Vetter is the world leader in the design and manufacture of pneumatic
lifting and sealing bags for vehicle and air rescue, environmental protection,
industrial maintenance, and disaster recovery and control.
PROGRESS CONTINUES ON CORPORATE INITIATIVES
"We continue to use our long-term initiatives to create top- and bottom-line
growth," Williams said. "Our drive for rapid process improvement is increasing
the gross margin. Gross margin of 39.9 percent improved 190 basis points versus
the prior year and 120 basis points sequentially. Six Sigma, Kaizen and Lean
Manufacturing, and Global Sourcing continue to contribute to our margin
expansion. First quarter savings from Six Sigma, Kaizen and Lean totaled $2.6
million, while Global Sourcing savings were $2.9 million."
3-FOR-2 STOCK SPLIT AND DIVIDEND INCREASE
In a separate news release issued today, the company announced that its Board of
Directors has declared a 3-for-2 split of its common stock and approved a 29
percent increase in the quarterly cash dividend. The stock split will be payable
on May 28, 2004, to shareholders of record as of May 14, 2004. The dividend
action represents an increase to $0.12 per share on a post-split basis and will
be paid July 30, 2004, to shareholders of record as of July 15, 2004.
2004 RESULTS DEPEND ON PACE OF NEW ORDERS, SPEED OF RECOVERY
Looking ahead, Williams said, "Economic conditions in the first three months of
2004 certainly improved from the prior year and our performance in subsequent
quarters will depend on the strength of the recovery. 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. We believe IDEX is well
positioned for earnings growth as the economy improves. This is based on our
lower cost levels resulting from our restructuring actions; our operational
excellence initiatives; and our use of strong cash flow to cut debt and interest
expense. We continue to invest in new products, applications and global markets,
while pursuing strategic acquisitions to help drive IDEX's longer term
profitable growth."
CONFERENCE CALL TO BE BROADCAST OVER THE INTERNET
IDEX will broadcast its first quarter earnings conference call over the Internet
on Thursday, April 22, at 1:30 p.m. CDT. Chairman, President and Chief Executive
Officer Dennis Williams, and Vice President and Chief Financial Officer Dominic
Romeo will discuss the company's recent financial performance and respond to
questions from the financial analyst community.
IDEX invites interested investors to listen to the presentation, which will be
carried live on its Web site at www.idexcorp.com. Access also is available at
www.ccbn.com by selecting "Investment Portals," then "Company Boardroom,"
followed by entering the IDEX ticker symbol "IEX." Replays will be available on
both sites through May 6. Those who wish to listen should go to either Web site
several minutes before the discussion begins. After clicking on the presentation
icon, investors should follow the instructions to ensure their systems are set
up to hear the event, or download the correct applications at no charge.
Investors also will be able to hear a replay of the call by dialing 800-216-4437
(or 402-220-3876 for international participants) and using the passcode "IDEX."
A NOTE ON EBITDA AND FREE CASH FLOW
EBITDA means earnings before interest, income taxes, depreciation and
amortization, while free cash flow means cash flow from operating activities
less capital expenditures. Management uses these non-GAAP financial measures as
internal operating metrics. Management believes these measures are useful as
analytical indicators of leverage capacity and debt servicing ability, and uses
them to measure financial performance as well as for planning purposes. However,
they should not be considered as alternatives to net income, cash flow from
operating activities or any other items calculated in accordance with U.S. GAAP,
or as an indicator of operating performance. The definitions of EBITDA and free
cash flow used here may differ from those used by other companies.
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Exchange Act of 1934, as amended. These statements may relate to, among other
things, capital expenditures, cost reductions, cash flow, and operating
improvements and are indicated by words or phrases such as "anticipate,"
"estimate," "plans," "expects," "projects," "should," "will," "management
believes," "the company believes," "the company intends," and similar words or
phrases. These statements are subject to inherent uncertainties and risks that
could cause actual results to differ materially from those anticipated at the
date of this news release. The risks and uncertainties include, but are not
limited to, the following: economic and political consequences resulting from
terrorist attacks and wars; levels of industrial activity and economic
conditions in the U.S. and other countries around the world; pricing pressures
and other competitive factors, and levels of capital spending in certain
industries - all of which could have a material impact on order rates and IDEX's
results, particularly in light of the low levels of order backlogs it typically
maintains; its ability to make acquisitions and to integrate and operate
acquired businesses on a profitable basis; the relationship of the U.S. dollar
to other currencies and its impact on pricing and cost competitiveness;
political and economic conditions in foreign countries in which the company
operates; interest rates; capacity utilization and the effect this has on costs;
labor markets; market conditions and material costs; and developments with
respect to contingencies, such as litigation and environmental matters. The
forward-looking statements included here are only made as of the date of this
news release, and management undertakes no obligation to publicly update them to
reflect subsequent events or circumstances. Investors are cautioned not to rely
unduly on forward-looking statements when evaluating the information presented
here.
ABOUT IDEX
IDEX Corporation is a manufacturer of proprietary pumps and metering products,
dispensing equipment, and other engineered products with leading positions in
niche markets. Its products are sold to a wide range of industries throughout
the world. IDEX shares are traded on the New York Stock Exchange and Chicago
Stock Exchange under the symbol "IEX."
FOR FURTHER INFORMATION ON IDEX CORPORATION AND ITS BUSINESS UNITS,
VISIT THE COMPANY'S WEB SITE AT WWW.IDEXCORP.COM.
IDEX CORPORATION
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IDEX CORPORATION
Condensed Statements of Consolidated Operations
(in thousands except per share amounts)
First Quarter Ended
March 31, (a)
2004 2003
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Net sales $ 214,600 $ 195,498
Cost of sales 128,870 121,195
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Gross profit 85,730 74,303
Selling, general and administrative expenses 54,444 50,902
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Operating income 31,286 23,401
Other income - net 11 20
Interest expense 3,436 3,739
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Income before income taxes 27,861 19,682
Provision for income taxes 10,169 6,987
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Net income $ 17,692 $ 12,695
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Earnings per Common Share:
Basic earnings per common share $ 0.54 $ 0.39
Diluted earnings per common share $ 0.52 $ 0.39
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Share Data:
Basic weighted average common shares outstanding 32,983 32,291
Diluted weighted average common shares outstanding 34,186 32,805
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Condensed Consolidated Balance Sheets
(in thousands)
March 31, December 31,
2004 2003
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Assets
Current assets
Cash and cash equivalents $ 7,832 $ 8,552
Receivables - net 113,216 101,859
Inventories 109,077 105,304
Other current assets 10,464 8,781
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Total current assets 240,589 224,496
Property, plant and equipment - net 150,127 147,095
Goodwill - net 592,556 559,008
Intangible assets - net 19,470 19,401
Other noncurrent assets 17,276 10,739
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Total $ 1,020,018 $ 960,739
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Liabilities and shareholders' equity
Trade accounts payable $ 67,233 $ 56,252
Dividends payable 4,669 4,622
Accrued expenses 60,667 54,807
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Total current liabilities 132,569 115,681
Long-term debt 198,794 176,546
Other noncurrent liabilities 77,532 76,410
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Total liabilities 408,895 368,637
Shareholders' equity 611,123 592,102
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Total $ 1,020,018 $ 960,739
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See following page for notes to condensed financial statements.
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IDEX CORPORATION
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IDEX CORPORATION
Company and Business Group Financial Information
(dollars in thousands)
First Quarter Ended
March 31, (a)
2004 2003
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Pump Products
Net sales $ 121,210 $ 111,004
Operating income (b) 18,800 15,675
Operating margin 15.5 % 14.1 %
Depreciation and amortization $ 3,859 $ 4,432
Capital expenditures 3,733 2,339
Dispensing Equipment
Net sales $ 41,619 $ 39,282
Operating income (b) 7,896 4,852
Operating margin 19.0 % 12.4 %
Depreciation and amortization $ 1,430 $ 1,574
Capital expenditures 651 414
Other Engineered Products
Net sales $ 52,444 $ 46,004
Operating income (b) 10,669 7,150
Operating margin 20.3 % 15.5 %
Depreciation and amortization $ 1,432 $ 1,300
Capital expenditures 844 1,008
Company
Net sales $ 214,600 $ 195,498
Operating income 31,286 23,401
Operating margin 14.6 % 12.0 %
Depreciation and amortization (c) $ 7,628 $ 7,911
Capital expenditures 5,348 3,792
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(a) Includes acquisition of Sponsler Co., Inc. (June 2003) and Classic
Engineering, Inc. (September 2003) in the Pump Products Group and Manfred
Vetter GmbH (January 2004) in the Other Engineered Products Group from the
dates of acquisition.
(b) Group operating income excludes unallocated corporate operating expenses in
both years.
(c) Excludes amortization of debt issuance expenses.
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