IDEX Q2 Earnings Call Highlights

• Industrial Tech Crossovers: When Manufacturing Meets Innovation

IDEX (NYSE:IEX) reported second-quarter 2026 results that exceeded its expectations, supported by growth in its Health Science Technologies segment, stronger orders and operational execution. The company raised its full-year outlook for organic sales growth, adjusted EBITDA margin and adjusted earnings per share.

Organic sales increased 5% year over year in the second quarter, while adjusted EBITDA margin expanded 70 basis points to 28.1%. Adjusted earnings per share rose 12% to $2.32. President and Chief Executive Officer Eric Ashleman said the results were driven most significantly by higher volumes in the company’s growth platforms.

Orders grew 28% organically across IDEX, reaching a record level of more than $1 billion. Each of the company’s three reporting segments posted double-digit order growth, led by Health Science Technologies, or HST, where orders rose 47% organically.

Growth platforms drive HST demand

Ashleman said HST demand was concentrated in data center, semiconductor, and space and defense applications. Those application sets collectively represented more than one-third of HST revenue year to date, according to the company.

IDEX cited demand for Performance Pneumatics products supporting primary and standby power generation connected to data center construction, as well as liquid-cooling flow-control systems used in data center infrastructure. In semiconductor markets, the company provides high-purity gas filtration, sealing, optical detection and thermal-management products for process tools, inspection systems and metrology equipment.

The company said its Mott filtration business has increased recurring revenue within HST’s semiconductor portfolio to approximately 50%. Ashleman also pointed to engineered components for space and defense applications, where IDEX is seeking to establish specifications for emerging technologies that can create longer-term revenue streams.

HST organic revenue rose 12% in the quarter, while its adjusted EBITDA margin expanded 270 basis points year over year. Sean Gillen, IDEX’s senior vice president and chief financial officer, said the margin performance reflected volume leverage and positive price-cost dynamics, including the effect of tariff refunds.

During the question-and-answer session, Ashleman said HST’s increasing order backlog includes some customer demand extending into 2027, particularly in data-center-related pneumatics. He cautioned, however, that much of IDEX remains a rapid-replenishment business with short lead times.

Tariff refunds affected reported results

IDEX received refunds during the quarter related to tariffs under the International Emergency Economic Powers Act, or IEEPA. Gillen said the refunds lowered cost of sales, while interest paid by the U.S. government slightly reduced net interest expense. In some cases, IDEX expects to provide customer rebates, which are accounted for as a reduction in sales.

The combined net effect added $0.08 to adjusted EPS during the quarter. Customer rebates tied to the refunds reduced reported organic growth by 2 percentage points.

Gillen said tariff refunds provided a 130-basis-point benefit to consolidated adjusted EBITDA margin. Excluding the tariff-related effects, adjusted EBITDA margin was toward the high end of the company’s prior guidance range of 26.5% to 27%.

The company said it expects most of the tariff-refund and related rebate activity to remain confined to the second quarter.

FMT and FSDP orders improve despite mixed sales trends

Fluid Metering Technologies, or FMT, posted organic order growth of 11% and organic sales growth of 1%. The water platform and mining-related operations supported sales, while agricultural, chemical and energy end markets remained softer.

Ashleman said IDEX’s municipal water business continued to benefit from demand for wastewater analytics and inspection tools. He also said the company’s high-purity water pumping and heating systems used in semiconductor applications had added momentum to the water platform. The company reported double-digit growth for the platform in the second quarter.

FMT adjusted EBITDA margin declined 20 basis points year over year, as unfavorable mix more than offset tariff-refund benefits and productivity gains. Gillen noted that tariff refunds provided a 180-basis-point benefit to the segment’s margin, and said underlying margin performance was in line with IDEX’s expectations.

Fire Safety/Diversified Products, or FSDP, reported 19% organic order growth, aided by aerospace demand at BAND-IT, including a significant blanket order, and continued momentum in North American fire and integrated-system orders. Organic sales declined 1%, reflecting lower dispensing activity and softer European rescue markets, partly offset by aerospace strength.

FSDP adjusted EBITDA margin declined 50 basis points, with unfavorable mix and volume deleverage partially offset by productivity improvements. Tariff refunds benefited the segment’s margin by 120 basis points.

Ashleman said the company was seeing early signs of broader industrial improvement in smaller, distribution-driven orders late in the second quarter and into July. He said this activity had followed earlier strength in longer-lead-time projects, including municipal water, mining and data-center-related applications.

Outlook and capital allocation

IDEX increased its full-year 2026 organic growth outlook to 5% to 6%, from its previous forecast of 3% to 4%. The company now expects approximately low-double-digit growth in HST, while projecting FMT and FSDP to be slightly higher year over year.

• Adjusted EBITDA margin is expected to be 27% to 27.3%, up from prior guidance of 26.5% to 27%.
• Adjusted EPS is expected to be $8.70 to $8.85, compared with previous guidance of $8.35 to $8.55.
• For the third quarter, IDEX expects organic growth of 5% to 7%, adjusted EBITDA margin of 27% to 27.5%, and adjusted EPS of $2.20 to $2.25.

The company generated $177 million in free cash flow during the quarter and ended the period with more than $1.1 billion of liquidity. Gross leverage declined to 1.9 times from 2.1 times a year earlier.

IDEX spent $77 million repurchasing shares and paid $54 million in dividends during the second quarter. Gillen said the company plans to maintain quarterly share repurchases at roughly $75 million through the remainder of 2026, while retaining flexibility based on leverage, bolt-on acquisition opportunities and portfolio decisions.

Capital expenditures are now expected to total approximately $110 million for 2026, up from the prior $90 million forecast. Ashleman said most of the incremental spending will support HST capacity and capabilities for anticipated demand in 2027, 2028 and beyond.

About IDEX (NYSE:IEX)

IDEX Corporation is a diversified industrial manufacturer specializing in the design, production and distribution of highly engineered fluidics systems, measurement technologies and safety solutions. The company's core offerings include positive-displacement pumps, flow meters, valves, sampling systems and analytical instruments that serve a wide range of end markets such as water treatment, chemical processing, energy, food and beverage, and life sciences. Through its focus on precision engineering and proprietary material science, IDEX delivers products designed for reliability in demanding applications.

Operations at IDEX are organized into three principal segments.

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