iex-20220930

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________

Form 10-Q


☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended	September 30, 2022


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from	to

Commission file number 1-10235

IDEX CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Delaware

36-3555336

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

3100 Sanders Road,

Suite 301,

Northbrook,

Illinois

60062

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (847) 498-7070

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common Stock, par value $.01 per share

IEX

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer ☐

Non-accelerated filer ☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

Number of shares of common stock of IDEX Corporation outstanding as of October 21, 2022: 75,421,109.

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TABLE OF CONTENTS


Part I. Financial Information
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Income	2
	Condensed Consolidated Statements of Comprehensive Income	3
	Condensed Consolidated Statements of Equity	4
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
	Note 1. Basis of Presentation and Significant Accounting Policies	7
	Note 2. Acquisitions and Divestitures	7
	Note 3. Business Segments	12
	Note 4. Revenue	13
	Note 5. Earnings Per Common Share	17
	Note 6. Inventories	17
	Note 7. Goodwill and Intangible Assets	18
	Note 8. Accrued Expenses	19
	Note 9. Other Noncurrent Liabilities	19
	Note 10. Borrowings	20
	Note 11. Fair Value Measurements	21
	Note 12. Leases	22
	Note 13. Restructuring Expenses and Asset Impairments	23
	Note 14. Other Comprehensive Loss	26
	Note 15. Share Repurchases	26
	Note 16. Share-Based Compensation	27
	Note 17. Retirement Benefits	31
	Note 18. Legal Proceedings	32
	Note 19. Income Taxes	32
	Note 20. Significant Events	32
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	52
Item 4.	Controls and Procedures	52

Part II. Other Information
Item 1.	Legal Proceedings	53
Item 1A.	Risk Factors	53
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 5.	Other Information	53
Item 6.	Exhibits	55
Signatures		56

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

IDEX CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in millions, except per share amounts)

(unaudited)


	September 30, 2022		December 31, 2021
ASSETS
Current assets
Cash and cash equivalents	$	680.7	$	855.4
Receivables, less allowance for doubtful accounts of $8.0 at September 30, 2022 and $7.2 at December 31, 2021	406.1		356.4
Inventories	455.3		370.4
Other current assets	92.9		95.8
Total current assets	1,635.0		1,678.0
Property, plant and equipment - net	303.5		327.3
Goodwill	2,191.2		2,167.7
Intangible assets - net	628.6		597.3
Other noncurrent assets	134.3		146.9
Total assets	$	4,892.6	$	4,917.2
LIABILITIES AND EQUITY
Current liabilities
Trade accounts payable	$	196.6	$	178.8
Accrued expenses	264.6		259.8

Dividends payable	45.3		41.4
Total current liabilities	506.5		480.0
Long-term borrowings	1,191.1		1,190.3
Deferred income taxes	185.7		196.4
Other noncurrent liabilities	206.7		247.4
Total liabilities	2,090.0		2,114.1
Commitments and contingencies
Shareholders’ equity
Preferred stock:
Authorized: 5,000,000 shares, $.01 per share par value; Issued: None	—		—
Common stock:
Authorized: 150,000,000 shares, $.01 per share par value
Issued: 90,071,346 shares at September 30, 2022 and 90,067,996 shares at December 31, 2021	0.9		0.9
Additional paid-in capital	812.0		795.6
Retained earnings	3,447.1		3,126.5
Treasury stock at cost: 14,543,722 shares at September 30, 2022 and 13,872,555 shares at December 31, 2021	(1,193.1)		(1,050.3)
Accumulated other comprehensive loss	(264.1)		(69.6)
Total shareholders’ equity	2,802.8		2,803.1
Noncontrolling interest	(0.2)		—
Total equity	2,802.6		2,803.1
Total liabilities and equity	$	4,892.6	$	4,917.2

See Notes to Condensed Consolidated Financial Statements

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IDEX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share amounts)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net sales	$	824.0	$	712.0	$	2,371.2	$	2,050.0
Cost of sales	442.2		400.4		1,290.0		1,139.7
Gross profit	381.8		311.6		1,081.2		910.3
Selling, general and administrative expenses	161.9		147.2		483.7		426.7
Restructuring expenses and asset impairments	17.7		3.2		21.1		8.6
Operating income	202.2		161.2		576.4		475.0
Gain on sale of business	(34.8)		—		(34.8)		—
Other (income) expense - net	(1.0)		0.6		(3.3)		17.0
Interest expense	9.6		9.5		28.6		31.4
Income before income taxes	228.4		151.1		585.9		426.6
Provision for income taxes	49.7		35.4		129.2		96.0
Net income	178.7		115.7		456.7		330.6
Net loss attributable to noncontrolling interest	—		—		0.2		—
Net income attributable to IDEX	$	178.7	$	115.7	$	456.9	$	330.6

Earnings per common share:
Basic earnings per common share attributable to IDEX	$	2.37	$	1.52	$	6.02	$	4.35
Diluted earnings per common share attributable to IDEX	$	2.36	$	1.51	$	6.00	$	4.33

Share data:
Basic weighted average common shares outstanding	75.4		76.0		75.8		76.0
Diluted weighted average common shares outstanding	75.8		76.5		76.1		76.4

See Notes to Condensed Consolidated Financial Statements

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IDEX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net income	$	178.7	$	115.7	$	456.7	$	330.6
Other comprehensive loss:
Reclassification adjustments for derivatives, net of tax	—		—		—		2.5
Pension and other postretirement adjustments, net of tax	0.6		0.8		1.8		10.8
Cumulative translation adjustment	(94.9)		(28.7)		(196.3)		(56.9)
Other comprehensive loss	(94.3)		(27.9)		(194.5)		(43.6)
Comprehensive income	84.4		87.8		262.2		287.0
Comprehensive loss attributable to noncontrolling interest	—		—		0.2		—
Comprehensive income attributable to IDEX	$	84.4	$	87.8	$	262.4	$	287.0

See Notes to Condensed Consolidated Financial Statements

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IDEX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Dollars in millions)

(unaudited)


					Accumulated Other Comprehensive Loss
	Common Stock and Additional Paid-In Capital		Retained Earnings		Cumulative Translation Adjustment		Retirement Benefits Adjustment		Treasury Stock		Total Shareholders’ Equity		Noncontrolling Interest		Total Equity
Balance, December 31, 2021	$	796.5	$	3,126.5	$	(62.2)	$	(7.4)	$	(1,050.3)	$	2,803.1	$	—	$	2,803.1
Net income (loss)	—		140.0		—		—		—		140.0		(0.1)		139.9
Cumulative translation adjustment	—		—		(19.5)		—		—		(19.5)		—		(19.5)
Net change in retirement obligations (net of tax of $0.2)	—		—		—		0.6		—		0.6		—		0.6
Issuance of 73,755 shares of common stock from issuance of unvested shares, performance share units and exercise of stock options (net of tax of $1.7)	—		—		—		—		1.4		1.4		—		1.4
Repurchase of 147,500 shares of common stock	—		—		—		—		(28.3)		(28.3)				(28.3)
Shares surrendered for tax withholding	—		—		—		—		(4.9)		(4.9)		—		(4.9)
Share-based compensation	6.6		—		—		—		—		6.6		—		6.6
Balance, March 31, 2022	$	803.1	$	3,266.5	$	(81.7)	$	(6.8)	$	(1,082.1)	$	2,899.0	$	(0.1)	$	2,898.9
Net income (loss)	—		138.2		—		—		—		138.2		(0.1)		138.1
Cumulative translation adjustment	—		—		(81.9)		—		—		(81.9)				(81.9)
Net change in retirement obligations (net of tax of $0.5)	—		—		—		0.6		—		0.6		—		0.6
Issuance of 42,408 shares of common stock from issuance of unvested shares, performance share units and exercise of stock options (net of tax of $0.4)	—		—		—		—		3.8		3.8		—		3.8
Repurchase of 474,690 shares of common stock	—		—		—		—		(87.5)		(87.5)		—		(87.5)
Share-based compensation	6.9		—		—		—		—		6.9		—		6.9
Cash dividends declared - $1.20 per common share outstanding	—		(90.9)		—		—		—		(90.9)		—		(90.9)
Balance, June 30, 2022	$	810.0	$	3,313.8	$	(163.6)	$	(6.2)	$	(1,165.8)	$	2,788.2	$	(0.2)	$	2,788.0
Net income	—		178.7		—		—		—		178.7		—		$	178.7
Cumulative translation adjustment	—		—		(94.9)		—		—		(94.9)				(94.9)
Net change in retirement obligations (net of tax of $—)	—		—		—		0.6		—		0.6		—		0.6
Issuance of 28,152 shares of common stock from issuance of unvested shares, performance share units and exercise of stock options (net of tax of $0.4)	—		—		—		—		3.8		3.8		—		3.8
Repurchase of 166,433 shares of common stock	—		—		—		—		(30.9)		(30.9)		—		(30.9)
Shares surrendered for tax withholding	—		—		—		—		(0.2)		(0.2)		—		(0.2)
Share-based compensation	2.9		—		—		—		—		2.9		—		2.9
Cash dividends declared - $0.60 per common share outstanding	—		(45.4)		—		—		—		(45.4)		—		(45.4)
Balance, September 30, 2022	$	812.9	$	3,447.1	$	(258.5)	$	(5.6)	$	(1,193.1)	$	2,802.8	$	(0.2)	$	2,802.6

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IDEX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (continued)

(Dollars in millions)

(unaudited)


					Accumulated Other Comprehensive Loss
	Common Stock and Additional Paid-In Capital		Retained Earnings		Cumulative Translation Adjustment		Retirement Benefits Adjustment		Cumulative Unrealized Gain (Loss) on Derivatives		Treasury Stock		Total Shareholders’ Equity		Noncontrolling Interest		Total Equity
Balance, December 31, 2020	$	776.1	$	2,841.5	$	13.4	$	(24.4)	$	(2.5)	$	(1,063.9)	$	2,540.2	$	0.1	$	2,540.3
Net income	—		112.7		—		—		—		—		112.7		—		112.7
Cumulative translation adjustment	—		—		(48.5)		—		—		—		(48.5)		—		(48.5)
Net change in retirement obligations (net of tax of $0.3)	—		—		—		0.8		—		—		0.8		—		0.8
Net change on derivatives designated as cash flow hedges (net of tax of $0.2)	—		—		—		—		0.7		—		0.7		—		0.7
Issuance of 106,122 shares of common stock from issuance of unvested shares, performance share units and exercise of stock options (net of tax of $1.9)	—		—		—		—		—		3.2		3.2		—		3.2
Shares surrendered for tax withholding	—		—		—		—		—		(5.4)		(5.4)		—		(5.4)
Share-based compensation	6.2		—		—		—		—		—		6.2		—		6.2
Balance, March 31, 2021	$	782.3	$	2,954.2	$	(35.1)	$	(23.6)	$	(1.8)	$	(1,066.1)	$	2,609.9	$	0.1	$	2,610.0
Net income	—		102.2		—		—		—		—		102.2		—		102.2
Cumulative translation adjustment	—		—		20.3		—		—		—		20.3		—		20.3
Net change in retirement obligations (net of tax of $2.8)	—		—		—		9.2		—		—		9.2		—		9.2
Net change on derivatives designated as cash flow hedges (net of tax of $0.5)	—		—		—		—		1.8		—		1.8		—		1.8
Issuance of 67,476 shares of common stock from issuance of unvested shares, performance share units and exercise of stock options (net of tax of $0.6)	—		—		—		—		—		7.5		7.5		—		7.5
Shares surrendered for tax withholding	—		—		—		—		—		(0.1)		(0.1)		—		(0.1)
Share-based compensation	4.3		—		—		—		—		—		4.3		—		4.3
Cash dividends declared - $1.08 per common share outstanding	—		(82.3)		—		—		—		—		(82.3)		—		(82.3)
Balance, June 30, 2021	$	786.6	$	2,974.1	$	(14.8)	$	(14.4)	$	—	$	(1,058.7)	$	2,672.8	$	0.1	$	2,672.9
Net income	—		115.7		—		—		—		—		115.7				115.7
Cumulative translation adjustment	—		—		(28.7)		—		—		—		(28.7)		—		(28.7)
Net change in retirement obligations (net of tax of $0.3)	—		—		—		0.8		—		—		0.8		—		0.8
Issuance of 34,390 shares of common stock from issuance of unvested shares, performance share units and exercise of stock options (net of tax of $0.2)	—		—		—		—		—		1.8		1.8		—		1.8
Shares surrendered for tax withholding	—		—		—		—		—		(0.1)		(0.1)		—		(0.1)
Share-based compensation	4.9		—		—		—		—		—		4.9		—		4.9
Cash dividends declared - $0.54 per common share outstanding	—		(41.0)		—		—		—		—		(41.0)		—		(41.0)
Balance, September 30, 2021	$	791.5	$	3,048.8	$	(43.5)	$	(13.6)	$	—	$	(1,057.0)	$	2,726.2	$	0.1	$	2,726.3

See Notes to Condensed Consolidated Financial Statements

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IDEX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(unaudited)


	Nine Months Ended September 30,
	2022		2021
Cash flows from operating activities
Net income	$	456.7	$	330.6
Adjustments to reconcile net income to net cash provided by operating activities:
Gains on sales of assets	(3.0)		—
Gain on sale of business	(34.8)		—
Asset impairments	17.0		0.8
Depreciation and amortization	37.0		32.3
Amortization of intangible assets	49.2		40.7
Amortization of debt issuance expenses	1.2		1.4
Share-based compensation expense	16.4		15.4
Deferred income taxes	0.2		(7.1)
Non-cash interest expense associated with forward starting swaps	—		3.3
Termination of the U.S. pension plan	—		9.7
Changes in (net of the effect from acquisitions/divestitures and foreign exchange):
Receivables	(62.5)		(59.2)
Inventories	(99.6)		(28.1)
Other current assets	(4.8)		6.0
Trade accounts payable	25.6		21.0
Deferred revenue	(24.7)		14.8
Accrued expenses	13.1		18.9
Other - net	3.1		1.7
Net cash flows provided by operating activities	390.1		402.2
Cash flows from investing activities
Purchases of property, plant and equipment	(48.0)		(45.5)
Acquisition of businesses, net of cash acquired	(232.6)		(575.6)

Note receivable from collaborative partner	—		(4.2)
Proceeds from disposal of fixed assets	7.0		0.2
Proceeds from sale of business, net of cash remitted	49.4		—
Other - net	(0.2)		0.9
Net cash flows used in investing activities	(224.4)		(624.2)
Cash flows from financing activities
Borrowings under revolving credit facilities	40.0		—
Payments under revolving credit facilities	(40.0)