Second Quarter 2023 Highlights

(All comparisons are against the second quarter of 2022 unless otherwise noted)

• Record sales of $846.2 million, up 6% overall and 3% organically
• Reported EPS of $1.82, up 1% and record adjusted EPS of $2.18, up 8%
• Strong operating cash flow of $141 million, up 26%; free cash flow of $120 million, up 24%
• Completed acquisition of Iridian Spectral Technologies on May 19, 2023

IDEX Corporation (NYSE: IEX) today announced its financial results for the three month period ended June 30, 2023.

“IDEX achieved record sales and adjusted earnings per share in the second quarter,” said Eric D. Ashleman, IDEX Corporation Chief Executive Officer and President. “Our view on core IDEX industrial markets continues to hold as inventory and backlog recalibrates in line with our supply chain improvements and lead time reductions. Our Fluid & Metering and Fire & Safety / Diversified Products businesses delivered strong organic growth and profitability within this environment.”

“Our businesses within our Health & Science Technologies segment remained challenged, impacted by customers' sharp inventory recalibration and demand softness after two years of double-digit growth. At this point we no longer expect market recovery within the second half of the year. Our teams are appropriately balanced as they execute targeted cost reductions to mitigate a portion of these volume declines, drive strong cash flow overall, and continue to innovate for our customers.”

"Regardless of macroeconomic fluctuations, we remain focused on initiatives to drive long-term growth. IDEX continues to be well positioned in markets with strong secular growth trends and critical technologies that enable above-market performance over an economic cycle. Our balance sheet is strong and provides ample capacity to fund our disciplined capital deployment strategy."

2023 Outlook

Full year 2023 organic sales are projected to decline 1 to 2 percent over the prior year, with GAAP EPS of $6.80 - $6.90 (adjusted EPS of $7.90 - $8.00).

Third quarter 2023 organic sales are projected to decline 7 to 8 percent over the prior year period, with GAAP EPS of $1.60 - $1.65 (adjusted EPS of $1.84 - $1.89).

Consolidated Results

Orders

Second quarter 2023 orders of $765.9 million reflected a 9 percent decrease compared with the prior year period (-13 percent organic and +4 percent acquisitions/divestitures).

Net Sales

Second quarter 2023 net sales of $846.2 million reflected a 6 percent increase compared with the prior year period (+3 percent organic, +4 percent acquisitions/divestitures and -1 percent foreign currency translation).

Gross Margin

Second quarter 2023 gross margin of 44.7 percent decreased 10 basis points compared with the prior year period primarily due to lower volume leverage, the dilutive impact of acquisitions and unfavorable mix, partially offset by strong price/cost and favorable operational productivity, net of higher employee-related costs.

Net Income and Earnings per Share Attributable to IDEX

Second quarter 2023 net income attributable to IDEX increased $0.4 million to $138.6 million, which resulted in EPS attributable to IDEX of $1.82 per share, an increase of 1 cent per share, or 1 percent, from the prior year period. The second quarter 2023 effective tax rate of 22.4 percent was relatively consistent compared with the second quarter 2022 effective tax rate of 22.1 percent. Adjusted EPS attributable to IDEX, which reflects the impact of non-GAAP adjustments, net of related taxes, was $2.18 per share, an increase of 16 cents per share, or 8 percent, from the prior year period.

Net Income Margin and Adjusted EBITDA Margin

Second quarter 2023 net income margin of 16.4 percent decreased 90 basis points compared with the prior year period. The decrease was driven by a reserve recorded on an investment with a collaborative partner, higher amortization on new acquisitions and higher interest expense, partially offset by operational performance discussed below. Second quarter 2023 Adjusted EBITDA margin of 28.4 percent, which reflects the impact of non-GAAP adjustments, increased 90 basis points compared with the prior year period driven by strong price/cost, operational productivity and lower variable compensation costs, partially offset by lower volume leverage, higher employee-related costs and unfavorable mix.

Cash Flow

Second quarter 2023 cash from operations of $141.2 million was up 26 percent primarily due to lower investments in working capital in 2023 as compared with 2022. Second quarter 2023 free cash flow included higher capital expenditures and was $119.6 million, up 24 percent compared with the prior year period and constituted 72 percent of adjusted net income attributable to IDEX.

Segment Highlights

Fluid & Metering Technologies ("FMT")

• Second quarter 2023 net sales of $325.1 million reflected an 8 percent increase compared with the second quarter of 2022 (+10 percent organic, -1 percent acquisitions/divestitures and -1 percent foreign currency translation).
• Second quarter 2023 Adjusted EBITDA margin was 35.1%, up 340 basis points compared with the prior year period primarily due to strong price/cost, higher volume leverage, lower discretionary spending, favorable operational productivity and the accretive impact of acquisitions, net of divestitures, partially offset by higher employee-related costs and unfavorable mix.

Health & Science Technologies ("HST")

• Second quarter 2023 net sales of $339.5 million reflected a 4 percent increase compared with the second quarter of 2022 (-6 percent organic and +10 percent acquisitions).
• Second quarter 2023 Adjusted EBITDA margin was 27.6%, down 420 basis points compared with the prior year period primarily due to unfavorable volume leverage, higher employee-related costs and unfavorable mix, partially offset by strong price/cost as well as lower discretionary spending and lower variable compensation costs.

Fire & Safety/Diversified Products ("FSDP")

• Second quarter 2023 net sales of $184.8 million reflected an 8 percent increase compared with the second quarter of 2022 (+8 percent organic).
• Second quarter 2023 Adjusted EBITDA margin was 29.4%, up 300 basis points compared with the prior year period primarily due to strong price/cost, favorable mix, lower variable compensation costs, higher volume leverage and favorable operational productivity, net of higher employee-related costs.

Corporate Costs

Corporate costs included in consolidated Adjusted EBITDA were $21.6 million in the second quarter of 2023, a decrease of $2.9 million compared with the prior year period as a result of lower compensation costs.

Debt Offering and Redemption

On June 13, 2023, the Company completed a private placement of a $100.0 million aggregate principal amount of 5.13% Senior Notes due June 13, 2028. The Company used the proceeds from this Notes issuance to repay the $100.0 million 3.20% Senior Notes due June 13, 2023.

Acquisition

On May 19, 2023, the Company completed the acquisition of Iridian Spectral Technologies ("Iridian"). Iridian is a global leader in designing and manufacturing thin-film, multi-layer optical filters serving the laser communications, telecommunications and life sciences markets and expands the Company’s array of optical technology offerings. Headquartered in Ottawa, Ontario, Canada, Iridian operates in the Company’s Scientific Fluidics & Optics reporting unit within the HST segment. Iridian was acquired for cash consideration of $110.3 million. The entire purchase price was funded with cash on hand.

Conference Call to be Broadcast over the Internet

IDEX will broadcast its second quarter earnings conference call over the Internet on Thursday, July 27, 2023 at 9:30 a.m. CT. Chief Executive Officer and President Eric Ashleman and Senior Vice President and Chief Financial Officer William Grogan will discuss the Company’s recent financial performance and respond to questions from the financial analyst community. IDEX invites interested investors to listen to the call and view the accompanying slide presentation, which will be carried live on its website at www.idexcorp.com. Those who wish to participate should log on several minutes before the discussion begins. After clicking on the presentation icon, investors should follow the instructions to ensure their systems are set up to hear the event and view the presentation slides or download the correct applications at no charge. Investors will also be able to hear a replay of the call by dialing 877.660.6853 (or 201.612.7415 for international participants) using the ID #13734463.

Forward-Looking Statements

This news release contains “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These statements may relate to, among other things, the Company’s third quarter 2023 and full year 2023 outlook including expected organic sales projections, expected earnings per share and adjusted earnings per share, and the assumptions underlying these expectations, anticipated future acquisition behavior, availability of cash and financing alternatives and the anticipated benefits of the Company’s recent acquisitions, including the acquisitions of Nexsight, LLC and its businesses Envirosight, WinCan, MyTana and Pipeline Renewal Technologies (“Nexsight”), KZ CO. ("KZValve"), Muon B.V. and its subsidiaries ("Muon Group") and Iridian Spectral Technologies ("Iridian"), and are indicated by words or phrases such as “anticipates,” “estimates,” “plans,” “guidance,” “expects,” “projects,” “forecasts,” “should,” “could,” “will,” “management believes,” “the Company believes,” “the Company intends” and similar words or phrases. These statements are subject to inherent uncertainties and risks that could cause actual results to differ materially from those anticipated at the date of this news release.

The risks and uncertainties include, but are not limited to, the following: levels of industrial activity and economic conditions in the U.S. and other countries around the world, including uncertainties in the financial markets and adverse developments affecting the financial services industry; pricing pressures, including inflation and rising interest rates, and other competitive factors and levels of capital spending in certain industries, all of which could have a material impact on order rates and the Company’s results; the impact of health epidemics and pandemics and terrorist attacks and wars, which could have an adverse impact on the Company's business by creating disruptions in the global supply chain and by potentially having an adverse impact on the global economy; the Company’s ability to make acquisitions and to integrate and operate acquired businesses on a profitable basis; the relationship of the U.S. dollar to other currencies and its impact on pricing and cost competitiveness; political and economic conditions in foreign countries in which the Company operates; developments with respect to trade policy and tariffs; capacity utilization and the effect this has on costs; labor markets; supply chain conditions; market conditions and material costs; risks related to environmental, social and corporate governance issues, including those related to climate change and sustainability; and developments with respect to contingencies, such as litigation and environmental matters.

Additional factors that could cause actual results to differ materially from those reflected in the forward-looking statements include, but are not limited to, the risks discussed in the “Risk Factors” section included in the Company’s most recent annual report on Form 10-K and the Company’s subsequent quarterly reports filed with the Securities and Exchange Commission (“SEC”) and the other risks discussed in the Company’s filings with the SEC. The forward-looking statements included here are only made as of the date of this news release, and management undertakes no obligation to publicly update them to reflect subsequent events or circumstances, except as may be required by law. Investors are cautioned not to rely unduly on forward-looking statements when evaluating the information presented here.

About IDEX

IDEX (NYSE: IEX) makes thousands of products and mission-critical components that improve everyday life all around you. If you enjoy chocolate, it quite possibly passed through a Viking® internal gear pump at the candy factory. If you were ever in a car accident, emergency workers may have used the Hurst Jaws of Life® rescue tool to save your life. If your doctor ordered a DNA test to predict your risk of disease or determine a course of treatment, the lab may have used equipment containing components made by IDEX Health & Science. Founded in 1988 with three small, entrepreneurial manufacturing companies, we’re proud to say that we now call over 50 diverse businesses around the world part of the IDEX family. With more than 8,500 employees and manufacturing operations in more than 20 countries, IDEX is a high-performing, global company with over $3.1 billion in annual sales, committed to making trusted solutions that improve lives. IDEX shares are traded on the New York Stock Exchange under the symbol “IEX.” For further information on IDEX Corporation and its business units, visit the company’s website at www.idexcorp.com.

(Financial reports follow)

Non-GAAP Measures of Financial Performance

The Company prepares its public financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP). The Company supplements certain GAAP financial performance metrics with non-GAAP financial performance metrics. Management believes these non-GAAP financial performance metrics provide investors with greater insight, transparency and a more comprehensive understanding of the financial information used by management in its financial and operational decision making because certain of these adjusted metrics exclude items not reflective of ongoing operations, as identified in the reconciliations below. Reconciliations of non-GAAP financial performance metrics to their most directly comparable GAAP financial performance metrics are defined and presented below and should not be considered a substitute for, nor superior to, the financial data prepared in accordance with GAAP. Due to rounding, numbers presented throughout this and other documents may not add up or recalculate precisely. There were no adjustments to GAAP financial performance metrics other than the items noted below.

• Organic orders and net sales are calculated excluding amounts from acquired or divested businesses during the first twelve months of ownership or prior to divestiture and the impact of foreign currency translation.
• Adjusted gross profit is calculated as gross profit plus fair value inventory step-up charges.
• Adjusted gross margin is calculated as adjusted gross profit divided by net sales.
• Adjusted net income attributable to IDEX is calculated as Net income attributable to IDEX plus restructuring expenses and asset impairments, plus fair value inventory step-up charges, less gains on sales of assets, plus the credit loss on a note receivable from a collaborative partner, plus acquisition-related intangible asset amortization, all net of the statutory tax expense or benefit.
• Adjusted diluted EPS attributable to IDEX is calculated as adjusted net income attributable to IDEX divided by the diluted weighted average shares outstanding.
• Consolidated Adjusted EBITDA is calculated as consolidated earnings before interest, taxes, depreciation and amortization, or consolidated EBITDA, plus fair value inventory step-up charges, plus restructuring expenses and asset impairments, less gains on sales of assets, plus the credit loss on a note receivable from a collaborative partner.
• Consolidated Adjusted EBITDA margin is calculated as Consolidated Adjusted EBITDA divided by Net sales.
• Free cash flow is calculated as cash flows from operating activities less capital expenditures.

Table 1: Reconciliations of the Change in Net Sales to Organic Net Sales

Table 2: Reconciliations of Reported-to-Adjusted Gross Profit and Margin

Table 3: Reconciliations of Reported-to-Adjusted Net Income and Diluted EPS

Table 3: Reconciliations of Reported-to-Adjusted Net Income and Diluted EPS (Continued)

Table 4: Reconciliations of Net Income to Adjusted EBITDA

Table 4: Reconciliations of Net Income to Adjusted EBITDA (Continued)