IEX - Earnings call 3 2023 | IDEX Corporation

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Operator

Greetings, and welcome to IDEX Corporation's Third Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Allison Lausas. Thank you.

You may begin.

Allison Lausas

everyone. morning, Good Lausas, Officer Allison Financial and Officer This IDEX Interim Corporation. Accounting for Chief is Chief Thank joining third quarter you the XXXX of for financial us for highlights. discussion our IDEX

company's our X months can during September issued release a with Last release, The today's company be ending idexcorp.com. operating to the night, the outlining webcast, presentation XX, we slides our website for at performance financial press press on along XXXX. accessed and used be

Executive today full Officer results, an discuss President. of outlook business. is will Eric in the with me the quarter IDEX's an quarter Chief begin our Joining XXXX. segment our performance we for fourth and the Ashleman, of year financial IDEX's on third then Today, they Eric markets overview and and update I providing will state serve,

remarks, Following will questions. call for the your open our prepared we

to you the on entering may replay XXXXXXXX, log a to complete you should replay. call call or the homepage conference If our by webcast reason, X the need for XXX-XXXX for any simply and access number after (XXX) concludes, approximately exit beginning ID the company hours toll-free dialing

a call certain statements safe the Securities may are reminder. we Commission. forward-looking release the brief last harbor subject IDEX's contain to night's in filings with Before that language press begin, in This and and Exchange

to and President, CEO call Eric our I that, over turn now With this will Ashleman.

Eric Ashleman

important X. good news Thanks, Slide I some on Allison, and morning, have everyone.

Officer. leads President serving Before I'd financial has Vice analysis Relations interim CFO. us Allison planning X for Investor our and with Lausas, Chief also turning to our as to as results our serving who our and outlook, functions. and years, is Allison like and She been Accounting introduce over

doing done his Bill her Bill you're former During strong many Allison, at your of service to at And I'd to and partner IDEX, as thank expanded for our IDEX. like a also for role. Grogan, myself. CFO, all has in you, interim an outstanding Thank serving Allison job, years tenure

CIRCOR announce Corporation, that November next services a release Also, CFO. saw Vice Multi-Color President he our where of and as over you during top that, IDEX in CFO is as CFO. partner as us provider, of years, have most Khandelwal Senior financial in us our as the he to Abhi are us, He solutions our consider to served I previously Abhi to from of served joins COO. global with packaging term Prior Allison my International. to and joining pleased at worked label thrilled for at very my and We're him IDEX fortunate yesterday, as Abhi we finance like XX organization. back and leaders have serving as

our performance. profitability quarter, the that, are an where I'm robust With volumes results I'll environment QX to delivering X. on strong levels. third in delivered at stabilizing lower IDEX turn Slide in

a contributions We teams also was I'd cost on for our environment. outstanding globe containment solid to their and the IDEX generated our around in these plans. excellent cash flows very reduction difficult to execute thank as like in This we execution results. inventory driving continue

FSDP expected That quarter. within FMT Recall out we the destocking moderate to expected. within played that and as our and cycle third end markets municipal elongated the an and of industrial reach

rapid semicon half the and the along life equilibrium Our first after the of cycle bounced markets largely bottom analytical instrumentation, sciences, in destocking at and pharma year. unprecedented QX HST held in within an

typical pre-pandemic moves position, all profiles. aligned this together, IDEX lead quarter natural backlogs where very Taken next with into and times, visibility, a

catalysts rates are interest driven a or space bit divergence see our tied These by market and to continue environmental broadband analytics, prospects. attractive discrete broader rebounds There we out to sustainability include infrastructure. appear include of between a and expanding water forward, end moved within transformational Examples specifically, for have battery many segments, our into More within uncertainty opportunities businesses pressured of of framework within most critical to concerns are risk. which HST Looking sit geopolitical XXXX. production. higher macro demand that each

organizational serve speed We focused our opportunities, to ahead. profitable our and dynamically growth we quality We of that outstanding strategy of near-term resources to and decision-making, turns believe well on the strong a outperformance. us can and capital long-term business assign agility, continue best twists while both navigate culture stay to

competitive Within we breakthrough our this expanding advantaged focus. to with terms growth complementary M&A seek within are hardware reach water did capabilities. to following We recently In as our and a our software deployment, through of builds, most aggressively be threads enhanced we build capital continues businesses our acquisition, our between advantage. top funnel technologies analytics and Nexsight

Iridian integrated year within boosted optics. earlier this Our capabilities thin-film acquisition

inorganic sheet of balance our Our M&A high quality, opportunities. us our in to engage strong ample and allowing has strategic robust to pipeline and on discipline continue to with execute best intent. And is capacity

on business million term Micropump note the and quarter our our repaid divested we Finally, during $XXX facility.

continue we will long-term occasional As occur. on focus to portfolio growth, realignment

of would We on since express it like-minded joins IDEX transfer for all appreciation has my similar like collection focused Micropump expect to this of joining a and team as technologies the better position Micropump XXXX. ownership done businesses, in will customers. I

to over our With that, discuss I'll to results. turn Allison it financial

Allison Lausas

Eric. Thanks,

million a unless in results grew are $XXX segment growth and and of in organic HST decrease of by XX% XXXX, X%. a organically organic decrease and million down consolidated our experienced X% against financial Slide HST down down our of X. in were and experienced FSD X% organic organically. Orders We down overall X% to revenues comparisons third Sales X% stated. FSD. within on FMT FMT. XX% decrease the an All overall otherwise third were $XXX organically. Moving and quarter We on quarter

XX.X%, year. was down due margin decreased to and XX offset of Adjusted productivity XX.X% was basis points margin mix, Gross points. basis which primarily decreased margin and XX partially by by volume compared strong costs. with last XXX basis lower points, leverage Adjusted unfavorable price operational EBITDA gross

tax XX.X%. Muon On drivers effective QX to that XXXX basis, foreign and expected our increase our finalization down next of impact tax by tax The on not gain income on earnings. I third tax the reduced treatment research was a on driven of minimum Micropump both the quarter of GAAP XX.X% rate. the a discuss effective fourth rate rate rate have the expenditure served rate our lower source the to acquisition than and partly that on significant of tax foreign on will divestiture our were offset benefits the related quarter adjusted a was capitalization slide. election the EBITDA to favorable are items by of in These recorded from

which rate midpoint EPS $X.XX, $X.XX. prior adjusted our year in of income which third favorability net GAAP $X.XX and was adjusted EPS $XXX X%. of quarter was guidance. quarter $X.XX the to $XXX million, million, resulted down Adjusted The income the with current of tax contributed is in or the both lower Net EPS of compared

we business due through inventory over our million by Finally, We $XX primarily targeted up year efforts, inventory quarter versus saw Free operations remain net sales. of quarter due and reductions. XX%, was adjusted and inventory from of for the cash $XXX was cash working the to million, last capital, conversion $XXX a of out of income. with the quarter up turns consistent in driven flow lower to of rate drove third lower million reduction XXX% XX% achieved last

which quarter XX, EBITDA. compared the our Slide to on by $X EBITDA Adjusted adjusted third XXXX. the decreased to details drivers third of quarter million Moving

to was adjusted Our rate. accretive sales adjusted year impacted $XX drove Price productivity at cost margin X% flowing organic through unfavorably million reduction inflation. operational that we margins, employee-related gross EBITDA by prior offset our and

the mainly a million, as our our components. we million last $X to variable continued semiconductor organic was continue XX% quarter. in analytical life expense by line declines volume centered top favorable unfavorable execute the Resource Reductions cost to due science containment year, was on we Mix spending HST, benefit experiencing. discretionary are instrumentation, of These results yielded and flow-through. versus and pressure $X given negative compensation contributed plan in in in

revenue IDEX contributed and to acquisitions, FX valuable grow adjusted of well managed reallocation ensuring Knight favorable. than focus continuity an stronger Muon and and turn and $X on dynamics positioned has cost Micropump net and of additional of recover EBITDA. resource when team's our containment most million market effectively has Overall, before divestitures resources our our back decline, Iridian

deeper and technology partly offset segment, at slowdown continued Metering With by Fluid our that, this businesses destocking favorable X% in Sales our orders performance. industrial and performance. provide segment a energy, X% impact, I'll I'm business. In mainly destocking decreased & agriculture water our driven look due chemical by our organically, expected organically, on decreased XX. by customer by Page an in to

third year, steady quarter. our see second and We the at level remain throughout that the day this they industrial began quarter rates order decline to in of

Although tied and to initiatives we energy tailwinds to domestic caution, our lower customers prices, to continue due within and concerns exercise infrastructure see mining. recession

experience by distribution farm incoming the of crop Within destocking, agriculture, impact we continue exacerbated declining to prices. net

delivery and gain to Our are to offset on focused targeted outperform our share we this continues pressure. competitors,

actuation the strong Additionally, results. its is of automated acquisition technology KZValve the of and delivering adoption

our well, see down growth. versus pharma battery backlogs quarter and U.S., On Europe the revenue for providing and we Asia, market, backlog we the energy driving demand results times. opportunities the market continue Underlying declines continue see as and we chemical to but normalizes. remains side, to third to execute expect across lead positive position In steady, with applications

Our exhibit to water business continues growth.

see leverage. more no municipal we operational primarily cost signs productivity approach as to project XXXX. points lower margin year, funding and last of to opportunity we compared expanded are Our volume increasing, funnels basis XX strong Adjusted price and offsetting delays favorable than EBITDA due

market basis price performance due strong points, and We industrial as decrease semiconductor a and to by decrease, by primarily pressure contracted within partially the organic favorable to XXX life due lower well operational experienced Adjusted similar Moving unfavorable markets segment. a FMT. analytical leverage volume XX% orders and sales instrumentation productivity. that sciences, EBITDA to HST cost mainly mix, XX% the to as across offset organic margins and

lower and Our business remains softness, to analytical economy. overall spending destocking, pharma-biopharma the by global instrumentation which driven around caution China experience continues customers

quarter, within in stable in performance life our XXXX. We science similar will expect with We that business. remain the this improvement trend at a see level fourth

a expectation to Semiconductor softness We recover some the with the begin market in continues will third bottom point has quarter. that market at to broader experience a XXXX. in anticipate the reached

which initiatives, broadband capabilities. communication results are We space, see bolstered stemming our continue from technological positive Iridian's by laser to

processing within material continues are across as in well markets line and results. biopharma, technology nutrition and early production the seeing signs to and connected HST Our as of FMT's technology but tailwinds food with application. slowed some pharma Industrial experience in our to markets quarter, business leveraging softness battery improvement

to at The America and destocking market due in price Products driving The productivity, Fire unfavorable grew and and year operational time, consumer mix Adjusted strong to margins last & remains remains turning environment XXX results quarter points, volume third strong construction same more versus North than orders the segment. our cost global offsetting uncertain fire basis lower, organic favorable paint at X% primarily mixed. Safety confidence while Diversified with by BAND-IT. Organic offset Finally, is sales grew X%, and EBITDA by lower the expanded strong. macro leverage. market by partially safety

fire not business, our do any changes America capacity. OEM production we Within significant see fire to North

integrated to continue value-add through that standardized systems and offerings We throughput. OEM technology enable and higher win

steady. Europe and remain businesses Our Asia

vehicles. having by remains due within outperform on to borrowing North American delays some a inventory we lower experienced are content is of driven U.S. and side, destocking performance on as to Rescue steady relatively reduction costs. aviation. continues prices, energy BAND-IT and flat the signs although market high-priority we some well, seeing pressure high oil auto due There to budget some

and on to and range I'm our quarter year update I an from to QX, X% on adjusted that, fourth $X.XX projecting X% be expected about expected XX%. $X.XX EBITDA like from revenue Slide to XXXX. to $X.XX. outlook full we EPS to decline margins range Organic for are provide adjusted are With to XX. is $X.XX would GAAP In and the EPS to to

the in us guide, expected. revenues results better fourth expect previous offset third offsetting is Equally, backlog FMT quarter versus strong to expected. driving $X.XX slightly will unfavorable our quarter be than volumes our and faster We HST quarter landing expectations. and third our by our than work an of impact through equal This allowed execution that to

the XXXX. Turning to full year

effective the guidance We the tax EPS with X%. in guidance remainder operational quarter. offset timing by lower maintaining revenue we the quarter X% raised full outperformance, partly driven revenue by midpoint, accelerated burn year due to our third down approximately are organic of third $X.XX to have from $X.XX, of $X.XX and backlog At quarter coming by our rate third

contraction XX.X%. revenue $X.XX $X.XX be EPS expenditures organic free EBITDA and estimate be of and to X% XXX-plus be approximately GAAP full we $X.XX adjusted Adjusted expected $X.XX. summary, cash In of of to yield percent million, of about anticipated income. to are EPS expected to is year to margin is X% net adjusted to $XX Capital to flow

I'll turn over questions. for your that, operator With it to the

Operator

first Our comes Capital RBC Markets. question Instructions] from Dray [Operator Deane with

Deane Dray

First, of news. who the start from CFO with congratulations praises. are heard seeing couple We've on executives IDEX former a obvious

rejoin. fabulous can add him that's to all role And interim her her thanks to you got help then So my Allison CFO. in I for as

Eric Ashleman

Thanks for both comments.

Allison Lausas

Thank you.

Deane Dray

Eric, some for maybe, macro. So picture big questions,

the how synthesizing of the macro like having that? mixed Warren suggests that But signals. term? are going over and here rates, and BAND-IT businesses, all on is through Lead second of just inputs to from in leading play kind the a at day slow lot near knows take your different the to your that times great us and that anything started click things maybe like Rupp, You're giving quarter. out What's

Eric Ashleman

I to those the and we in often we our eye keep Well, on discretely of And canaries small Yes. rates as and stuff day-to-day an at track order out We order those mean, about sort kind level. it of businesses projects. parse mine. weekly five refer do flow the coal of

the can on in second third frankly, the and there they're What dead see almost we flat. between is, quarter,

moderated. that the of the largely frankly, played through So the we I the the half first predicted moderate kind of year, destocking and out of at think, year cycle beginning

we quarter, Even quarter the changes within a see of lot month-to-month didn't there. -- to

So what our in a that of world. is there's lot says kind because that distributors

fast Our based of the times. were kind us our lead inventory users, on end right of all back to quick position our replenishment,

goes the think it an be would upward? does And the to of flex question it now when of uncertain I start into sort Those businesses. environment,

course, see that. early watch we to would Of indications of

further out out. to flattened holding. it waiting signaling There's brings it's but if more see now, It's signs. decent trouble right there, There's not encouraging for opportunities any So and certainly activity there. here some forth and

Deane Dray

in in right has Instruments HST And the Life -- then is preface second gotten I'll one question with this and Analytical so the this far. no Sciences,

-- it's that been and Danaher group, the fluid. the Thermo it's and whole pretty whether Just

market some see might And so but confidence demand your that analytical in be because off. some I here just equipment, degree we're here some falling of there's wanted not to suggestion the this there that destocking, it's bottoming just demand end side, instrument

worse in October. So it gotten seems to have

just does you? degree of how the of for So this calibrate your half 'XX confidence, for first this business

Eric Ashleman

I I a little context because I our got the set in take those want think to you described. to to relation environment in time here comments

describing that that's as science, of mean, semicon, through buckets said fall Analytical when business First exposure four this piece talking and in we remarks, into I about that's well all, kind course, the we're prepared life of of Pharma of instruments, as that's about the HST, it. we're this. of primarily that piece the category. of larger as walk half I

over line, about for year we I up the in this actually you the out of clinical we're to year. last heads get back a think, it's nature, said, and us. others, and year. think of into that you QX series of go have played want you almost course as saw a components the been here have this, actually back, additive noise And Because time to if say, some that's fact of actually Then around short to we of that I our

just it aggressive thought demand moderate. something Initially, simply to more turning was

destocking of out. many reexamination QX. of our Then, in that businesses it was positions frankly, points. felt just too a And played of at seeing course, inventory we much it and course, that in way Of

in I been of third China's been going think lack probably the quarter, second earlier being or kind second the third forces, in of relative concerns macro it's inning, to if a we you -- has as and it periods. what thereof some will, contribution forward here some significant or about most

What that's pretty three aggressively earlier of us of for is, we course, kind there's felt out. So that I played things that in the done think piece.

the make. businesses backlog lot we the factories here our that in our supply, component we a the the an within see equilibrium. in and there's more I position, of our And So quarter, quarter, of last nature of inventory where kind can products because of position that's moderately visibility

how levels. bit forces it occur So we're that's and would I hitting that don't up unwind see a come to might we're any when us more of loop things and play open of And from different in or does external ahead mean, recovery out. of will say, little the again, simply uncertainty to I four there trying the frankly, past. That and that that the kind Deane, it back

that in So have maybe science while to people to out off some those that things some some the think the things are be working there where other demand of go, kind places as fall that, may that life could and against that we're going may of they be in potentially in about that interim. wash other are arenas, going

a So for us. equilibrium more variable a bit little term is of

I But else, that those shocks or the now, play to like seeing the over we last those behind out so. system And saw abnormal We're us. essentially that everybody are think year to we of and customer plan innovation course lean take what forward, the here. look are our a go at people can from streams poke doing level kind in and and start

Operator

Baird. Mike from is with Robert question next W. Halloran Our

Michael Halloran

both I So Deane follow to up those questions to want asked.

science clear analytical So saying life on what on instrumentation just sure I'm side. to you're the make

it's matching from to linear in just that I some point of with at sell-in not am that? where You're sell-out? you're expecting Or necessarily saying misinterpreting sort like anything You're saying or that? market end fashion here the the recover is

Eric Ashleman

that's think I good. No,

people was that better at context but what's we're lithography the I we're Again, did, than the science I -- really level can instrument or important sure instruments. for to here, the make probably understand You us. recognize to little trying it inside life summarized a inside component

critical replenishment. these very fast items, are So

And to so And the same yes, a series sync. in of of open we at variability now unwinding essentially sync I we're end was unnatural patterns, describing are that, is this point. us in but kind that market and

Michael Halloran

Exactly.

next onward hits, you least call the comps that's but mid-XQ easy from, where starting And it, at as are variability get so type range? into the year,

Eric Ashleman

the as Well, certainly, easier. comps year the progresses, get yes, increasingly

Michael Halloran

things. that into about about thinking economically you it. perspective, being From Got you're risk of as like parts destock destock Maybe but a as piece. talked we of saying you side are head that maybe worsening some the how going cycle higher sense. lot profile, that's the are 'XX? clouded level, by the your a And The day then short sound sensitive of the in, seeing on, doesn't of business makes there's rates much

So we full a on help just as some [indiscernible]. think

Eric Ashleman

I it Yes. is mean, interesting.

day I people here, rates and think work. high mean I is we're still that levels, working, are the industrial pretty business suggests healthy it at that are putting pretty the I flatness factories to performing producing described in those talking a a that system level. canary things that about that's

the geopolitical higher are year, risk interest from commitments feeling, it, in -- that's next the things because pick U.S. the right? that in a Certainly are next uncertainty that the election spring to though, discussions consequences or they're around mean, major conversations people of increasing around just position they're longer-term of going of out harder there, all the to I have rate year, anything happen on

the a anything on are of continuing of but a backing see of lot You sort for side higher day, wait-and-see a approach that the the level up can of to things that day one on to horizon. of just kind see at forecast with uncertainties happening kind because people passed to

Michael Halloran

Did XQ want say makes a Allison. that you to One Yes, from just Allison. shifted I follow-up, clarification for into was, that XQ? clarify what statement quick $X.XX sense.

Allison Lausas

That's correct, Mike.

aggressive find down in So we more backlog can third quarter. pull

back it's year. So of just half within a the shift the timing of

Operator

with question Nathan Our Stifel. next from comes Jones

Nathan Jones

you order in about it lower a FMT, customer in the versus decline bit Is of in XQ I'll the for rates backlogs rates XQ to than HST I The and guess lower than XQ. orders in order a kind aboard in end actual question think here. in is dollars XQ out you decline what possible a in demand? actual what market bit a ask separate is

move wouldn't inventory I to businesses And here having that towards correction that dollars you improvement fourth trying get both into guess then talking at orders I'm quarter? see in imply moved happened if you're the about of of is, those should selling what we and sequential the we to actual more sell-through, in as

Eric Ashleman

I talk the those look, system a well, to we But lot of businesses operating. that of indicator the of on again, a have about day-to-day, early sort weight predictive lot Yes. abilities put how is

means that think a I that -- stability So lot. again,

mean think In of earlier bit. this change environment, we patterns I replenishment. companies They increments little a patterns. to now people with shorter can mean, seeing there IDEX, comment faster do order Mike, like order had Remember, moving know certainly, you're -- an I for I I deliver

customer Our really are metrics satisfaction good.

requirements you to uncertainty, in that quarters a X to year order ago. ago you feel don't of any had or if have kind same give you nearly So your us visibility the

think go. I a order of that order changes do as in you So more of the piece profiling, that, you a it see

I lead to on so mean again, And along influence the aggressive keep tend other into order down, patterns that any the time pretty At some coming does we backlog times for way. folks -- side. ate

that think environment, it's the on and by think but things like the says, large, a especially looking To next out, stable one catalyst. around this pretty industrial base, a is I side. stable I for that's So playing me,

Nathan Jones

in projects. do know of question, investments. don't are larger interest I stuff dynamics, guess into customers the investors goes inflation, lot concerned think I you my ROI for changing the those have that on rates large I have but that business changing been projects, a And follow-up rising you guys

to in historically, out seeing Can customers' let seen projects? I these on capital you're know hesitate people you larger talk about willingness kinds environments. you've these what of

us give seeing on what color So can just any you're you there.

Eric Ashleman

good. I answer as -- mean you've that that move certainty not are well. got projects very to talking is We're the like that's they're probably closer And to people a the like that piece around getting to Well, them, XXXX they last horizon. your magnet. but still a about question some start Yes. of time

And come becomes all to expansion contextually it. Again, are to in infrastructure. it people pointing things point in of or as food fruition that reference us, related a to something planned and for our point the that not of businesses, when something but of commitment that's calendar we'll a so it a where might side or see like for part

things require planning. those of together, a a So of kind discrete that lot of capital lot will come

I around a think due instead, same the and And there faster is kind a longer lot of them. -- rebuild before it's to of bit level current running it's more uncertainty. uncertainty system that you little it

Operator

Allison from comes question Wells with next Fargo. Our Poliniak

Allison Poliniak-Cusic

So just to to back go want HST. Eric, I

One we slowed cycle. known all? coming investing organic thoughts talk that Could analytical you're the instrumentation, that Has is thinking the the things life any how new slower out through Should product maybe IDEX development for about at this? of cycle there. Or has in of maybe expect you investment? maybe to been even a sciences? Just

Eric Ashleman

of here around requirements order the what last and and what's out. productivity reality levels and year, at I'm they're One glad crisp lots being is are, mentioned quite reactive in super of just because, happened side ground near-term containment actually by getting businesses, level the in of you see daily ways, over those are that realities actually product side, and the Well, in many you different. two sitting kind cost where

see find see entire customer I But thinking innovate next be world is doesn't we can't to mean, I something spending of ahead level, positive going in do time cycle? that of get you coming a there's okay, that think Because game the I to the through, here. even anybody the to what do to lot more need that at

the mega very to will with our who terms steps at been and in when are same our businesses customers. of out really that working is I runs ahead do, some get and on talking The us not again. occur trends that customer she's level of was far real innovative they business the after step-up significant driving in within there, to projects Teresa, we're describing But that it. and Terra conjunction a have forever sector seeing we're of

it's the of And in frankly, some the years. few that innovation last of I've seen highest jumps degrees

there's arrangement think is actually collaborative here industry talk where purposeful, I to to going very this So a go. about

is so to try stay as as can, times one this And we it think this. to comes capital of as those fast can resources we overfeed and, put like opportunities reasons I best them the nimble and out, in we frankly,

a So it called actually you've level. see we exactly it how at ground

Allison Poliniak-Cusic

we great. then we you obviously, today, unusual see as this Just a portfolio divestiture, of more this And something here. Or think as the good of that That's very one-off? cycle That's color. is a small Was think thoughts. of forward a sort go just might here? you any

Eric Ashleman

Well, I think it was -- it's a nice little business.

We we lot ability as tend to of are an necessarily of a just to not in be attractive technology didn't see I we us. larger-scale scale don't similar. that's that it, versions at looked think it. And have it as for markets

constantly, as for portfolio level But massive So I see IDEX. to is in of something as view do thinking just do think time that time. it that a shift one this play out it and I from you we could way wouldn't transformational that

what But of as stand-alone up And it in seems sum aggressive the increasingly decision that that element, going ability make a assess more different than I continue -- trying we the the tighter we're drive kind that that pieces look it is something a a is right to think referenced that. have about integrated we're potential ability to like growth we'll carefully. then at, that wouldn't to I scale, take outperformance, those to comments. opening IDEX. to of then look, don't here Things between little do choices. But

Operator

Our Vlad Bystricky next question from Citigroup. with comes

Vladimir Bystricky

forward? I to more about markets HST. in recovery, with previously but don't trajectory the maybe it, you markets demand during versus I views an missed on expectations XQ. think, know So prior us semicon semicon beginning maybe are going one and just if more know trending you I stabilize color expectation specifically of likely for your can on give on your talked I how XQ semicon-related

Eric Ashleman

it. an part We're is important, here. it's think that in and I But at Again, We're a instruments. hit less metrology sides sophisticated a than it one it's we -- IDEX from XXXX. but We're I of in small further I memory. We're stable into in pushed mean in of variety of fabs. XX%. We're Yes. levels. think certainly

And further is sector so spots, suggests a bit that think I we a out see of different it recovery it whole bunch little of but the into all from of XXXX.

do We're with can't critical. certainly components. those parts They We're to our and much customers. close

that we'll ramp I into but start intelligence, So somewhere out the order get suspect XXXX. will

Vladimir Bystricky

shifting helpful. just to That's the then Okay. And on took Again, FSDP. step sequentially. FSDP a down that orders maybe

is how you're So into going FSDP evolving XQ just guess seasonal on, there Or there? thinking forward? I and orders about any color something just

Allison Lausas

down to to Sure, did cycle come That's end step Vlad. take that. I really No, replenishment an there. as can the due dispensing that

see you slowdown third So that quarter. the in

a Rescue, You'll fourth. a of bit also see days. in into But quarter, Fire seasonality also fourth & bit production it in fewer we've got

Operator

with is Rob from question Wertheimer Melius Research. next Our

Robert Wertheimer

innovation cycle? question what is, products confidence it cycles? simpler the through Is your and you CapEx what like volatile it expected. HST conversation a I I on and your cycles? been Is could obviously the customer flow And joined than the a customers' it that drives wonder XXX, education how many has normalization volumes? almost purchasing? looks Is With if like? Just sciences and do life bit life more cycles

Eric Ashleman

No, it, I Rob. appreciate

-- look, So direct all, this it's super business. of a first is

customer talking set we're OEMs. a concentrated leading of relatively with So

parts it's in of quite So from other IDEX that different many respect.

years, last depending jump the until we've we stayed not It's single to semi the sort a forces the kind some been that of the seen generally industry. here kind digits of cyclical X of mid- on X pandemic with portion, at typically of where of very Up and it's in, the exception or high course. in of the

all this of as platform-centric In you -- businesses. cases, can these think are

or their in, instrument, So well to lithography and an either innovation that. or to up looking their it's ahead level, move the their next of is device, is stream comes somebody machine, moving

on the the on and cycle in spec are you secure there engineers points design spec. the and Our working

a it's pretty essentially, business. So platform classic

of early it. of in duration concurrently the run gestation or And you either always things platform, you're on late. a on in working you're different Once iterations

that aligned classically very very, way. it's So

into plans all have the inventory run you So we've adoption, the take launches devices, on you through is that into, we've as the program last course, kind for the do the about things of positions talked of here. the that good for gone runout programs, them, plans up, visibility variable year those of the

Robert Wertheimer

know Perfect. just just market. little the And there topic, go can a lot was I that acquisition field, I but I then a bit in I it. And -- appreciate if further if general on

to equity, when characterization there. private than You've of have flow cash And Or capital I'll market? guys seen pretty for are you getting of win? rising perhaps good easier faster stop cost any general that

Eric Ashleman

for mean be the to -- for on, not focused components outside little I niche often Well, bit a of We and the proprietary years planning maybe environment taking We here X world. where as very certainly very, tried in people mean, we've were frankly, things interact comfortable. cultivating well-known with X I we're Yes. We're advantage or last are the transactions. environments. that in see and

ourselves a relationships try depend at we as in to get on asset. frankly, competitors lot a where line conversations position to aren't an So there looking and of multiyear we're to

I a obviously with it. taking to here look extent only something levels agree it always and isn't. a out with at will That's different get the others pass. possible people allow can need That a higher that you've not us interest debt stay property can't quite like rates. lot probably financing of strategics be that and play to that to some and seen would There's longer might because

could a some that here maybe loop recently, you as positive. too, little others bit on recovery the they that reluctant way more demand would valuations wait in would to terminal support environment, side, I better see want you that quite curves though, a that values. to view more because or say higher are other in for transact of that So because

always better considered ideally it's proprietary in little more weeds more side. we're bit much if in this for us But and think the a a I So on discretely in ways, probably we've way. a that of it working bit many wash

Operator

question next BNP. Andrew Our from comes with Buscaglia

Andrew Buscaglia

year-end. declining How on invest tied HST. you to question of outlook, into if declining expected. do in that the or protecting it your FMT wondering, sales. so How strong everything a sounds on organic of Or to are them? Looking really your from your asked into -- do tie moderating kind orders context you your is like segment, with here I'm margins were your as margins

So means continue where is at market invest here? your to do you that for going is margins? Just it head what of kind with seeing and where

Eric Ashleman

glad fantastic I'm mean, FMT here. particular, in couple has things a first, noticed. mean Well, I Well, the of you segment, I performance. Yes.

in seeing of lean what containment, couple look, we're is, was anyways. last them there run the you're businesses cost we quarters, -- good. reasonable really Over QX And those pretty

steady much at run of the It's have last than years a few kind easier been. them state to

out And brings an they're frankly, So side from really doing drive recognized, performance. our their part our have and teams that outstanding an best. IDEX

They are I which from XX, are well all They I really businesses, that would in realities these almost an of mean XX, there. economic versions old. years do say are out investment XXX are positioned. profile, some of really, very well

So things do that generally They're production often making the we that's investments -- in they discrete positioned we're places, based. the support things of. we'll typically, certain or right sure that with well partners, are when go like e-mobility investments. always out the something -- to We channel And about growth at they talk battery right innovative, stay something to people thoughtful economy like mobility additive that.

But any the of make world. those of business, to that, of really, view expertise augment for make the base and depending that sure and just we careful we'll positioning, is of not, on really how differentiation margins that core in the supports the of or sound So staying the investments, franchise, domain all outside kind reality. that are the kind that incredible and we

Andrew Buscaglia

go -- into of sustainable really and yes, your organic kind operating XXXX? trends weakens that even in order -- mid it so the is And just low those if view, XXs negative, mid-XXs well continue margin EBITDA margins, sales to into

Eric Ashleman

core. side in last or we've to the if of the of seen close over of strong a keep margins there's mean kind and to tough a business negative, our things flat few kind that contribution it really things couple of gets to of of maintain couple I years, is deleveraging mind the because the and there. At times any commitment point,

where be of depending that. to we go, aware So always things have

the We are at cycle company today We've best we're probably price. the always the to here the that gets out is of been spread also at cost that price probably going point now. a continue future. not into That's --

aggressive been with lately Of more it's course, inflation. here

a gets are those on the best the of the moderation that this There's is prices sticky. at point We're is the and now pricing. that the where some company best part This inputs. cycle, of part

assuming little a good cycle. bit part of on piece is I'd of the of there's the it's So it's be state, careful part here. a of this perpetual

Operator

comes Our next Linzey Mizuho. Brett question from with

Brett Linzey

Just one more on HST.

the to need recover? think side, come dimension do time that? you in path see stabilization out. the to margin and figure the the out yielding Or But just they stronger-than-average should back? other or to some recovery of cost encouraging certainly, we profit take do is terms going a do some So way to of play on to as incremental and Any the they recovery when businesses

Allison Lausas

they'll As we lever nicely. recover,

HST the of is longer-term a the so margins more in expectation And EBITDA set of XX%-plus. businesses for

Brett Linzey

over just sounds It to the on shifting like Okay. comments opportunity then is the Great. water. increasing. And funnel you made

might be able or strength? stimulus of fiscal factors size other it independent that the And to some You is that. related driving to

Eric Ashleman

of a been to throughout. focused I things look state seen as to related, now in that well. on here Well, point of the major efforts gotten a of from of Yes. in in I it's it's certainly cities, the has the our mean, steady lot We've impossible to infrastructure. to indirectly infrastructure away where scale course, has major U.S. our Frankly, would invest the the say water side

are I putting multiyear take a and thought that just long two together It's it rollout think in I've always a These they go in to to -- just blanket. sector. -- long of blanket, are takes -- time time it as engineer a things there. out money those warm spend projects

going matter no of little kind of an have on discrete to so always how funding it's a run pop might the And elongated be, out. bit

like businesses blanket that as quarter seen others held again So in comfortable a that. we It's that sort this for and sector. up view ours well. this of are as in We've

profile. the would I dimensionalize of it's mean water at in that -- upper look nice it a at we growth the of can you portfolio, piece IDEX, it, stay it's of the size and and again, see to end would the

Operator

with from Giordano question TD Cowen. next comes Joe Our

Joseph Giordano

kind in your stuff clarify. about just of the -- worse. I and customers want the October HST to and weakness areas now of been of talking have A lot got

Like that to Does were the what your inventory orders did have be we the that normalized, you quarter versus HST fourth you know but I think relative of quarter? and sense? rest kind like of thinking the that clear So quarter? look dollars up in in like destocks make the very situations third and actual orders, do October should the

Eric Ashleman

-- ahead, Look, I'll go Allison. let

Allison Lausas

quarter. think, Sure. the to the in higher But as happens orders wrap we we basis, some year. dollar a I should also on fourth No, pure expect that blanket there see is activity some

Joseph Giordano

Okay.

a sign uptake? that order just improving, not things maybe are a it's seasonal that necessarily So of kind

Allison Lausas

close be That's keep -- right. to we'll We'll need watch. need to

Joseph Giordano

fact of the like -- nature and At just extension that point that, still. sub-X kind book-to-bill what given of that running the there business just of you're

So HST what at for start can baked to to in orders improve theoretically? be point, like -- of kind there's an when like XXXX? you be do like a for organic in number decline positive that Like need to

Eric Ashleman

I the Look, the fourth pretty we'd have to through will this -- think balance obviously monitor of quarter. we

the As same cycles does of time. at always, everybody the same planning kind

confidence things to opportunity in in for they're get launching, of that front about them. best their us programs, customers, the talk that's So

whole watch of to kind comments quarter are close to I -- the made. most think the place. come the it. and I just stay we These super that want in I by to have dynamic back it quarter we markets I

think I job summarizing question, good did when such beginning. it in Mike a the the he asked

and We're in all basically noise the that's out extent taken the of of instruments the the to different sophisticated saying making of geographies. past. inventory-related will in very the critical this, for sync essentially that say, industry I and heads for folks it. are of supplier that we've echo markets things a different directions are component variety and We're here, with a we

side somewhat going are success, those relevant traverse. they're diagnostic. that so on can the we're to sooner and dependent feel are our a completely anybody. going than to dependent inflections fact cycle. from their because the we we way short call, -- And What are markets we is of on Mainly, I seeing almost to that timely think, their And see those provide, do we're and

to stay to rates, And mind, we around. it's four We'll business and buckets so Again, slightly resources move us, close we at them. for move that different with occasionally need of can in of those all understand things.

we see through how out go we'll it 'XX. as plays So

Joseph Giordano

again accelerated fair. of had this And the with parts just of quarter, your the opportunities kind backlog That's last, do to business? that quarter there you in are fourth burn that targeted in

Eric Ashleman

level. a consolidation of IDEX we but spoke out a have them, of not pretty they're that issues couple we're supply of backlogs. of year of one some I It's in us working and many couple kind here to is some still stuff in was talked done third mean strong in We have still energy, pockets do of to backlog about ago. lingering the a We that have we've longer other we that that where in because quarter. back that through all elsewhere. businesses to get trying about chains related lot getting more of A generally down

Operator

now the closing Ashleman like back We the of end for question-and-answer have I'd over Eric to call session. comments. reached turn the to

Eric Ashleman

our IDEX strong execution really Well, the want members joining the that really, thanks the Okay. I of everybody always on for I in for for And do, as and performance quarter. to call. are team thank

here. few comments a -- just I

look, in I -- of uncertainty the environment. think out there a there's lot there's certainly

know. about amount control, a of we certain I think the I going that I IDEX to But and as think patience. require it's here's can what things

is think move well things It's M&A. support frankly, going one than outperformance. us faster teams through each outstanding November. anybody, nimble. flat growing and and great Abhi as shape. and And structure and portfolio here our are probably that joins every It's things I agile We really day. do and certainly can know plus around to to decentralized us our I long-term resource keeps our growth they're positioned, we in leaders and in outstanding be and

when for nice all world run starts we'll up as to trends coming. a IDEX that, frankly, I extended know really think, the support be to, the in, we respond with set dial here, things that break, So to all and are

and support, day. thanks So with for have a that, great your

Operator

This conference. concludes today's

may and for lines disconnect your your You at participation. this time, thank we you

IDEX (IEX) 26 Oct 232023 Q3 Earnings call transcript