IDEX Corp. (NYSE: IEX) reported Q1 EPS of $1.12, $0.05 better than the analyst estimate of $1.07. Revenue for the quarter came in at $585.9 million versus the consensus estimate of $573.48 million.

GUIDANCE:

IDEX Corp. sees FY2018 EPS of $4.90-$5.10, versus the consensus of $4.76.

Fourth Quarter 2017

• Orders of $603.0 million were up 10 percent compared with the prior year period (+9 percent organic, -1 percent acquisition/divestitures and +2 percent foreign currency translation).
• Sales of $585.9 million were up 10 percent compared with the prior year period (+9 percent organic, -1 percent acquisition/divestitures and +2 percent foreign currency translation).
• Gross margin of 44.5 percent was up 70 basis points compared with the prior year period. Excluding the $4.4 million pre-tax fair value inventory step-up charge from an acquisition in the prior year period, gross margin was down 20 basis points primarily due to additional engineering investments and operational challenges associated with the strong growth within HST.
• Operating income of $135.2 million resulted in an operating margin of 23.1 percent. Excluding a $9.3 million gain on divestiture and $3.7 million of restructuring expenses, adjusted operating income was $129.6 million with an adjusted operating margin of 22.1 percent, up 150 basis points from the prior year. Excluding the fair value step-up charge from an acquisition in the prior year period, adjusted operating margin was up 60 basis points. Adjusted operating income drove adjusted EBITDA of $149.4 million which was 25 percent of sales and covered interest expense by 14 times.
• Provision for income taxes of $29.9 million resulted in an ETR of 24.2 percent and included the tax impact from the gain on divestiture and restructuring expenses. Excluding the tax impact from the gain on divestiture and restructuring expenses, provision for income taxes was $31.1 million which resulted in an adjusted ETR of 26.4 percent.
• Net income was $93.7 million which resulted in EPS of $1.21. Excluding the gain on divestiture and restructuring expenses, adjusted EPS of $1.12 increased 16 cents, or 17 percent, from the prior year period adjusted EPS.
• Cash from operations of $136.2 million was up 18 percent from the prior year period and led to free cash flow of $120.4 million, which was up 14 percent from the prior year period and 139 percent of adjusted net income.

In the fourth quarter we executed on our disciplined capital deployment and segmentation strategies as we sold our Faure Herman business within our Energy group, and purchased thinXXS to support our microfluidics technologies within our Scientific Fluidics & Optics group. We continue to invest in the best organic growth opportunities and remain committed to strategic M&A, shareholder dividends and opportunistically repurchasing shares. Tax Reform in the United States will help bolster our already strong financial profile by providing additional earnings, cash flow and capital availability. We will use these additional resources to drive our existing strategy to maximize profitable growth and strong returns on capital. In line with our expectations for earnings growth in 2018, and subject to Board approval, we intend to raise our dividend 15 to 18 percent which would take us to the high end of our stated goal of distributing 30 to 35 percent of earnings to our shareholders.

For earnings history and earnings-related data on IDEX Corp. (IEX) click here.