EXHIBIT 99.1
IDEX REPORTS RECORD SECOND QUARTER SALES AND 12 PERCENT GROWTH
AS OPERATING MARGIN AND NET INCOME ALSO REACH HISTORIC HIGHS
NORTHBROOK, IL, JULY 20--IDEX CORPORATION (NYSE: IEX) today announced its
financial results for the quarter ended June 30, 2006. Net income of $35.0
million rose 21 percent and reached an historic high, while earnings per share
increased 18 percent to 65 cents, which included one cent from discontinued
operations. From continuing operations, orders in the second quarter were up 10
percent, sales increased 12 percent and income rose 20 percent to $34.4 million.
Diluted earnings per share from continuing operations were 64 cents versus 54
cents in the year-ago quarter. Second quarter 2006 results include stock option
expense of $2.3 million.
Q2 2006 HIGHLIGHTS (FROM CONTINUING OPERATIONS)
o Orders for the second quarter of 2006 were $290.5 million, 10 percent
higher than a year ago; excluding the impact of acquisitions and foreign
currency translation, organic orders growth was 5 percent. Year to date,
organic orders growth was 10 percent.
o Second quarter sales of $297.2 million rose 12 percent; excluding the
impact of acquisitions and foreign currency translation, organic sales
growth was 7 percent. Year to date, organic sales growth was 9 percent.
o Operating margin at 19.0 percent was 100 basis points higher than a year
ago.
o Stock option expense of $2.3 million had a 70 basis point effect on
operating margin during the second quarter.
o Income increased 20 percent to $34.4 million.
o Diluted EPS at 64 cents was 10 cents ahead of the second quarter of
2005.
o EBITDA of $63.1 million was 21 percent of sales.
o Free cash flow was $39.4 million, an increase of 31 percent from a year
ago.
o Announcement of the sale of Lubriquip, Inc. on July 11, 2006.
o Completion of previously announced acquisition of Eastern Plastics (EPI)
in a strategic expansion of health & science technologies business.
o Expansion of number of reporting segments from three to four segments,
reflecting a more focused market-driven strategy.
- --------------------------------------------------------------------------------
"We are pleased with our recent performance and consistent ability to generate
organic growth and expand our operating margin. During the quarter, our
businesses delivered record operating income and net income, as well as strong
cash flows. Organic sales growth through the first half of 2006 was 9 percent,
reflecting particular strength in Health & Science Technologies at 17 percent,
Fluid & Metering Technologies at 10 percent and Fire & Safety/ Diversified
Products at 9 percent. Within Dispensing Equipment, we continue to experience
strong demand in North America and less-than-favorable market conditions in
Europe. As we move forward, our businesses are well positioned in attractive
product segments driven by strong underlying industry segment fundamentals and,
even more importantly, our ability to effectively serve expanding niche
applications. Current order rates, coupled with our strong backlog, reinforce
our confidence as we enter the second half of 2006. We believe our business
model and operating strategy are very well suited to win in this dynamic
environment."
Lawrence D. Kingsley
Chairman and Chief Executive Officer
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SECOND QUARTER FINANCIAL HIGHLIGHTS
- -----------------------------------
(Dollars in millions, except per share amounts)
<Table>
<Caption>
FOR THE QUARTER ENDED
JUNE 30 March 31
2006 2005 Change 2006 Change
---- ---- ------ ---- ------
ORDERS WRITTEN $290.5 $264.9 10% $294.5 (1)%
SALES 297.2 264.9 12 266.9 11
OPERATING INCOME 56.3 47.6 18 47.3 19
OPERATING MARGIN 19.0% 18.0% 100bp 17.7% 130bp
INCOME FROM CONTINUING OPERATIONS $34.4 $28.6 20% $ 29.3 18%
NET INCOME 35.0 28.9 21 30.1 16
DILUTED EPS:
INCOME FROM CONTINUING OPERATIONS .64 .54 19 .54 19
NET INCOME .65 .55 18 .56 16
OTHER DATA
-- Income before Taxes $51.8 $44.0 18% $44.3 17%
-- Depreciation and Amortization 7.2 6.8 6 6.3 14
-- Interest 4.1 3.8 7 3.0 38
-- EBITDA 63.1 54.6 15 53.6 18
-- Cash Flow from Operating Activities 44.8 36.2 24 23.8 88
-- Capital Expenditures 5.4 6.1 (12) 4.0 34
-- Free Cash Flow 39.4 30.1 31 19.8 99
</Table>
Q2 ORDERS, SALES, INCOME AND EPS FROM CONTINUING OPERATIONS UP YEAR-OVER-YEAR
New orders in the quarter totaled $290.5 million, 10 percent higher than the
same period in 2005. Excluding the impact of acquisitions and foreign currency
translation, orders were up 5 percent. The second quarter orders growth rate was
impacted by blanket orders received in the first quarter of 2006. First quarter
2006 organic orders growth was 16 percent.
Sales in the second quarter of $297.2 million rose 12 percent from the
prior-year period. Excluding the impact of acquisitions and foreign currency
translation, organic growth was 7 percent. Sales to international customers
represented 46 percent of total sales for the second quarter of 2006 versus 45
percent in the year-ago quarter.
Second quarter operating margin was 19.0 percent, 100 basis points higher than
the 18.0 percent reported in the prior-year period. Gross margin of 41.4 percent
was equal to the second quarter of 2005. Volume leverage, coupled with the
company's strategic sourcing and other operational excellence initiatives, was
offset by product mix and the impact of acquisitions. Selling, general and
administrative expenses as a percent of sales decreased by 100 basis points from
the second quarter of 2005. Higher total SG&A expenses reflect acquisitions,
volume-related expenses, stock option expense and reinvestment in the business
to drive organic growth.
Income from continuing operations of $34.4 million increased 20 percent over the
second quarter of 2005. Diluted earnings per share from continuing operations of
64 cents improved 10 cents from the second quarter of 2005.
YEAR-TO-DATE FINANCIAL RESULTS
- ------------------------------
(Dollars in millions, except per share amounts)
<Table>
<Caption>
SIX MONTHS ENDED JUNE 30
2006 2005 Change
---- ---- ------
ORDERS WRITTEN $585.1 $524.1 12%
SALES 564.0 510.1 11
OPERATING INCOME 103.6 87.7 18
OPERATING MARGIN 18.4% 17.2% 120bp
INCOME FROM CONTINUING OPERATIONS $63.6 $51.8 23%
NET INCOME 65.0 52.6 24
DILUTED EPS:
INCOME FROM CONTINUING OPERATIONS 1.18 .99 19
NET INCOME 1.20 1.00 20
OTHER DATA
-- Income before Taxes $96.1 $80.3 20%
-- Depreciation and Amortization 13.5 13.7 (2)
-- Interest 7.0 7.7 (9)
-- EBITDA 116.6 101.7 15
-- Cash Flow from Operating Activities 68.6 51.7 33
-- Capital Expenditures 9.4 11.7 (20)
-- Free Cash Flow 59.2 40.0 48
</Table>
FIRST HALF ORDERS, SALES, INCOME AND EPS FROM CONTINUING OPERATIONS AHEAD OF
LAST YEAR
New orders for the first six months of 2006 totaled $585.1 million, 12 percent
higher than the first six months of last year. Excluding the impact of
acquisitions and foreign currency translation, orders in the first six months of
2006 were 10 percent higher than in 2005.
Sales for the first six months of 2006 increased 11 percent to $564.0 million
from $510.1 million a year earlier. Excluding the impact of acquisitions and
foreign currency translation, organic growth was 9 percent. Sales to
international customers from base businesses represented approximately 45
percent of total sales for the first six months of both 2006 and 2005.
First half operating margin was 18.4 percent, 120 basis points higher than the
17.2 percent reported in the prior-year period. This improvement reflects volume
leverage, along with a 20 basis point improvement in gross margin to 41.3
percent, resulting mainly from the company's strategic sourcing and other
operational excellence initiatives. Selling, general and administrative expenses
as a percent of sales decreased by 100 basis points from the first half of 2005.
Higher total SG&A expenses reflect acquisitions, volume-related expenses, stock
option expense and reinvestment in the business to drive organic growth.
Year-to-date income from continuing operations of $63.6 million increased 23
percent compared to 2005. Diluted earnings per share from continuing operations
of $1.18 rose 19 cents, or 19 percent, from the 99 cents recorded for the first
half of 2005.
SEGMENT RESULTS
Fluid & Metering Technologies sales in the second quarter of $108.4 million
reflected 9 percent organic growth. Operating margin of 20.3 percent represented
a 180 basis point improvement compared with the second quarter of 2005.
Health & Science Technologies sales in the second quarter of $81.3 million
reflected 14 percent organic growth. Operating margin of 17.9 percent
represented a 90 basis point improvement compared with the second quarter of
2005.
Dispensing Equipment sales of $44.4 million in the second quarter were down 4
percent on an organic basis. Operating margin of 26.3 percent represented a 150
basis point decline compared with the second quarter of 2005, due primarily to
volume and product mix.
Sales of Fire & Safety/Diversified Products during the second quarter of $64.6
million reflected 5 percent organic growth. Operating margin of 25.2 percent
represented a 240 basis point improvement compared with the second quarter of
2005.
During the quarter, Fluid & Metering Technologies contributed 36 percent of
sales and 34 percent of operating income; Health & Science Technologies
accounted for 27 percent of sales and 23 percent of operating income; Dispensing
Equipment accounted for 15 percent of sales and 18 percent of operating income;
and Fire & Safety/Diversified Products represented 22 percent of sales and 25
percent of operating income.
STRONG FINANCIAL POSITION
IDEX ended the quarter with total assets of $1.4 billion and working capital of
$179 million. Total debt was $199 million at June 30, 2006. Free cash flow (cash
flow from operating activities less capital expenditures) for the first half of
2006 was $59.2 million. Year-to-date, EBITDA (earnings before interest, taxes,
depreciation and amortization) totaled $116.6 million (21 percent of sales) and
covered interest expense by more than 16 times.
PROGRESS CONTINUES ON GROWTH INITIATIVES
"IDEX's broad-based growth stems from our ability to expand our served
application base," Kingsley said. "Our Mixed Model Lean expertise enables us to
flexibly respond to new market and new customer product requirements, as well as
changing customer needs. We continue to reduce plant cycle times and total lead
times, so that our customers remain competitive. Our other operational
excellence and strategic sourcing initiatives continue to improve our total
operating efficiency and allow us to further leverage our plant investment.
"We're also pleased with our progress toward applying our integrated operating
management system," Kingsley continued. "Our customer metrics and margin
expansion are evidence that our operational excellence strategy is working. The
second quarter operating margin improved to 19 percent, 100 basis points ahead
of the year-ago quarter. Excluding the impact of stock option expense, the
improvement was 170 basis points.
"At the same time," Kingsley said, "as an engineered products company, we
continue to focus on product innovation which enhances the value that we deliver
to our targeted process industry and selected OEM segments. The company's focus
on fluidic solutions and other carefully targeted engineered product segments is
enabling organic growth opportunities in all four business segments. Our
businesses are doing a terrific job of bringing new products to market, faster,
to enable us to effectively serve new industry applications."
ACQUISITION OF EPI
As previously announced, IDEX acquired the assets of Eastern Plastics, Inc.
(EPI) on May 2, 2006. EPI is a global leader in high-precision integrated
fluidics and associated engineered plastics solutions. Based in Bristol,
Connecticut, with revenues of approximately $30 million, EPI's products are used
in a broad set of end markets including medical diagnostics, analytical
instrumentation and laboratory automation.
"EPI strengthens our existing health and sciences businesses with experience
that is highly complementary to our current precision fluidics capability,"
Kingsley said. "We are particularly excited about EPI's capability in
increasingly close-tolerance fluidics solutions as applied to a variety of
instrumentation products. EPI is also a great addition to our growing expertise
in medical implantables and surgical devices."
SALE OF LUBRIQUIP
As previously announced on July 11, 2006, IDEX completed the sale of Lubriquip,
its lubricant dispensing business, to Graco Inc. The sale of this business
reflects a strategic divestiture as IDEX aligns its business portfolio within
Dispensing Equipment to focus on core strengths. The results of Lubriquip are
reported as discontinued operations effective with the company's second quarter
2006 financial results. IDEX expects to report an after-tax gain on the sale of
the business in the third quarter of 2006 of approximately $16 to $17 million,
or $0.29 to $0.31 per diluted share. This gain will be partially offset by the
discontinuation of earnings from the business in 2006. For informational
purposes, full year 2005 revenues and earnings per share for Lubriquip were
approximately $30 million and $0.05 per share, respectively.
2006 OUTLOOK
"As we move into the second half of 2006, we remain focused on delivering
consistent, sustainable sales and earnings growth," Kingsley said. "Our steady
emphasis on new product innovation and continuous process improvement continues
to deliver top and bottom-line growth. Our global position, niche market focus,
high mix operations profile and developing know-how in Mixed Model Lean position
us well to meet our customers' emerging needs for applied engineered solutions
anywhere in the world."
CONFERENCE CALL TO BE BROADCAST OVER THE INTERNET
IDEX will broadcast its second quarter earnings conference call over the
Internet on Thursday, July 20, 2006 at 1:30 p.m. CT. Chairman and Chief
Executive Officer Larry Kingsley 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 call and view the accompanying slide
presentation, which will be carried live on its Web site at www.idexcorp.com.
Those who wish to participate should log on 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 and
view the presentation slides, or download the correct applications at no charge.
Investors also will be able to hear a replay of the call by dialing 800.642.1687
or 706.645.9291 using conference ID #4089519.
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 an applied solutions company specializing in fluid and
metering technologies, health and science technologies, dispensing equipment,
and fire, safety and other diversified products built to its customers' exacting
specifications. Its products are sold in niche markets 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".
IDEX CORPORATION
ADD -6-
IDEX CORPORATION
CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
SECOND QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2006 2005 2006 2005
- ---------------------------------------------------------------------------------------------------------------------
NET SALES $297,169 $264,949 $564,036 $510,087
COST OF SALES 174,110 155,370 330,850 300,687
- ---------------------------------------------------------------------------------------------------------------------
GROSS PROFIT 123,059 109,579 233,186 209,400
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 66,739 61,989 129,603 121,715
- ---------------------------------------------------------------------------------------------------------------------
OPERATING INCOME 56,320 47,590 103,583 87,685
OTHER INCOME (EXPENSE) - NET (452) 245 (445) 337
INTEREST EXPENSE 4,074 3,806 7,028 7,685
- ---------------------------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 51,794 44,029 96,110 80,337
PROVISION FOR INCOME TAXES 17,409 15,451 32,469 28,547
- ---------------------------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS 34,385 28,578 63,641 51,790
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX 571 355 1,392 788
- ---------------------------------------------------------------------------------------------------------------------
NET INCOME $ 34,956 $ 28,933 $ 65,033 $ 52,578
=====================================================================================================================
BASIC EARNINGS PER COMMON SHARE:
CONTINUING OPERATIONS $ 0.65 $ 0.56 $ 1.20 $ 1.02
DISCONTINUED OPERATIONS 0.01 0.01 0.03 0.01
- ---------------------------------------------------------------------------------------------------------------------
NET INCOME $ 0.66 $ 0.57 $ 1.23 $ 1.03
=====================================================================================================================
DILUTED EARNINGS PER COMMON SHARE:
CONTINUING OPERATIONS $ 0.64 $ 0.54 $ 1.18 $ 0.99
DISCONTINUED OPERATIONS 0.01 0.01 0.02 0.01
- ---------------------------------------------------------------------------------------------------------------------
NET INCOME $ 0.65 $ 0.55 $ 1.20 $ 1.00
=====================================================================================================================
SHARE DATA:
BASIC WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 53,014 50,963 52,825 50,821
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 54,029 52,641 53,995 52,484
=====================================================================================================================
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
JUNE 30, DECEMBER 31,
2006 2005
- ---------------------------------------------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
CASH AND CASH EQUIVALENTS $ 51,052 $ 77,202
RECEIVABLES - NET 154,588 129,816
INVENTORIES 138,204 123,631
ASSETS HELD FOR SALE 9,109 9,138
OTHER CURRENT ASSETS 15,189 11,006
- ---------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 368,142 350,793
PROPERTY, PLANT AND EQUIPMENT - NET 154,675 142,663
GOODWILL 778,744 691,399
INTANGIBLE ASSETS - NET 54,639 28,615
OTHER NONCURRENT ASSETS 30,314 30,710
- ---------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 1,386,514 $ 1,244,180
=====================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
TRADE ACCOUNTS PAYABLE $ 78,848 $ 67,047
ACCRUED EXPENSES 91,455 72,481
SHORT-TERM BORROWINGS 7,773 3,144
LIABILITIES HELD FOR SALE 3,465 4,303
DIVIDENDS PAYABLE 7,999 6,321
- ---------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 189,540 153,296
LONG-TERM BORROWINGS 190,998 156,899
OTHER NONCURRENT LIABILITIES 93,231 110,975
- ---------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 473,769 421,170
SHAREHOLDERS' EQUITY 912,745 823,010
- ---------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,386,514 $ 1,244,180
=====================================================================================================================
IDEX CORPORATION
ADD -7-
IDEX CORPORATION
COMPANY AND BUSINESS GROUP FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)
SECOND QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2006 (a) 2005 2006 (a) 2005
- -----------------------------------------------------------------------------------------------------------------
FLUID & METERING TECHNOLOGIES
NET SALES $108,437 $ 98,793 $210,836 $192,264
OPERATING INCOME (b) 21,982 18,244 41,226 33,522
OPERATING MARGIN 20.3% 18.5% 19.6% 17.4%
DEPRECIATION AND AMORTIZATION $ 2,530 $ 2,551 $ 4,786 $ 5,163
CAPITAL EXPENDITURES 1,103 2,542 2,235 5,046
HEALTH & SCIENCE TECHNOLOGIES
NET SALES $ 81,299 $ 59,541 $144,320 $112,462
OPERATING INCOME (b) 14,513 10,115 26,793 19,117
OPERATING MARGIN 17.9% 17.0% 18.6% 17.0%
DEPRECIATION AND AMORTIZATION $ 1,829 $ 1,513 $ 3,228 $ 3,033
CAPITAL EXPENDITURES 1,190 1,571 2,067 2,657
DISPENSING EQUIPMENT
NET SALES $ 44,415 $ 46,308 $ 85,823 $ 90,715
OPERATING INCOME (b) 11,689 12,870 22,019 23,943
OPERATING MARGIN 26.3% 27.8% 25.7% 26.4%
DEPRECIATION AND AMORTIZATION $ 1,052 $ 1,088 $ 2,065 $ 2,178
CAPITAL EXPENDITURES 531 835 1,190 1,672
FIRE & SAFETY/DIVERSIFIED PRODUCTS
NET SALES $ 64,551 $ 61,199 $125,767 $116,771
OPERATING INCOME (b) 16,266 13,964 29,921 25,502
OPERATING MARGIN 25.2% 22.8% 23.8% 21.8%
DEPRECIATION AND AMORTIZATION $ 1,540 $ 1,489 $ 3,078 $ 3,057
CAPITAL EXPENDITURES 1,628 997 2,766 1,790
COMPANY
NET SALES $297,169 $264,949 $564,036 $510,087
OPERATING INCOME 56,320 47,590 103,583 87,685
OPERATING MARGIN 19.0% 18.0% 18.4% 17.2%
DEPRECIATION AND AMORTIZATION (c) $ 7,210 $ 6,792 $ 13,526 $ 13,734
CAPITAL EXPENDITURES 5,372 6,100 9,387 11,702
- -----------------------------------------------------------------------------------------------------------------
(a) SECOND QUARTER AND SIX MONTH DATA INCLUDES ACQUISITION OF JUN-AIR (FEBRUARY
2006) AND EPI (MAY 2006) IN THE HEALTH & SCIENCE TECHNOLOGIES GROUP AND
AIRSHORE (JANUARY 2006) IN THE FIRE & SAFETY/DIVERSIFIED PRODUCTS GROUP
FROM THE DATES OF ACQUISITION.
(b) GROUP OPERATING INCOME EXCLUDES UNALLOCATED CORPORATE OPERATING EXPENSES.
(c) EXCLUDES AMORTIZATION OF DEBT ISSUANCE EXPENSES AND UNEARNED COMPENSATION.