IDEX (IEX) Q4 2010 earnings summary

Executive summary

• FY10 sales rose 14% to $1.513B; organic sales excluding acquisitions and FX increased 12%, with recovery across most segments.

• Gross margin expanded 160 bps to 40.9%, operating margin rose 260 bps to 16.5%, and net income increased 39% to $157.1M.

• 2011 guidance called for mid-to-high single-digit organic growth and diluted EPS of $2.23–$2.33.

Financial highlights

• FY10 net sales were $1,513.1M, up 14%; organic growth was 12%, acquisitions added 3%, and FX reduced sales 1%.

• Gross profit increased 18% to $618.5M; SG&A rose to $358.3M, while SG&A as a share of sales improved to 23.7% from 24.5%.

• Operating income rose 35% to $249.1M; net income was $157.1M and diluted EPS was $1.90, up $0.50 YoY.

• Q4 sales were $405.2M, operating income $66.0M, net income $33.1M, and diluted EPS $0.50.

• Operating cash flow was $184.5M, down 13%, primarily reflecting the $31.0M settlement payment on the forward-starting interest-rate contract.

Outlook and guidance

• FY11 organic sales growth was forecast in the mid-to-high single digits; acquisition-related growth was projected at ~4% from 2010 deals and two expected Q1 acquisitions.

• FY11 diluted EPS guidance was $2.23–$2.33.

• Cash and operating cash flow were expected to cover 2011 operating needs, capex, interest, debt repayments, benefit funding, and dividends; existing credit facility and term-loan balances were expected to be repaid during 2011.