IDEX (IEX) Q4 2008 earnings summary

Executive summary

• FY08 sales rose 10% to $1,489.5M, driven by acquisitions and currency; organic sales were flat. Net income fell 15% to $131.4M, with restructuring and goodwill impairment weighing on operating results.

• International customers contributed 47% of sales; domestic organic sales declined 3%, while international organic sales increased 4%.

Financial highlights

• Net sales were $1,489.5M, up 10% YoY; acquisitions added 9% and FX 1%, while organic sales were flat.

• Gross profit rose 6% to $603.9M; reported gross margin declined 130 bps to 40.5%, reflecting mix, material costs and acquisitions.

• Reported operating income fell 17% to $212.4M; it included $18.0M of restructuring expenses and a $30.1M goodwill impairment charge.

• Net income was $131.4M, down 15%; diluted EPS was $1.60, down 15% YoY.

Outlook and guidance

• Liquidity was expected to cover operations, interest, required debt repayments, authorized repurchases, planned capex and dividends for the next 12 months.

• Additional acquisition financing could require long-term borrowing; availability on satisfactory terms was uncertain amid adverse financial and economic conditions.

• Management expected international operations and export sales to continue contributing to earnings; no earnings forecast was stated.